Sectoral total factor productivity and its determinants: firm-level evidence from Kazakhstan

This paper analyses total factor productivity (TFP) and domestic competition among firms in Kazakhstan.We show that TFP in many industries falls significantly from 2009 to 2017.At the same time, 3 to 10 of the largest firms occupy a significant market share in most industries, demonstrating the elements of oligopolistic competition.We estimate the impact of various financial indicators and variables, such as subsidies, R&D, and transportation costs on firm-level TFP.The results show that increased investments, profits, wages, subsidies and the presence of employees under 30 years of age or with higher education have a significant positive effect on TFP.In addition, the uneven distribution of subsidies among firms also contributes to the development of a monopoly in the market.Statistics show that five companies in the market receive up to 80% of subsidies in manufacturing and agriculture, which aggravates the market power of these firms.