Poverty in Kazakhstan

Abstract

To properly assess the extent of poverty in Kazakhstan it is important to understand the methodology of its definition and measurement. There are three basic concepts of measuring poverty. Absolute poverty is based on the establishment of a living wage or poverty line. The position of the World Bank is dominant in the world in the assessment of absolute poverty. The WB experts use multiple criteria income. An internationally accepted poverty line was established in 2005 at US$ 1.25 (PPP) per person per day. They also used less “hard” indicator of US$ 2 per day (in constant 2005 prices) which is the median poverty line for all developing countries. For the transitional economies WB applies poverty line based on the differential absolute poverty equal to US$ 4.3 (before 1999 – US$ 4), for developed economies – US$ 11. According to a relative concept, the category of poor includes individuals and households with income clearly insufficient to live on prevailing community standards of consumption. This approach is used primarily for the developed countries. For example, in the EU the relative poverty is defined at the level of 60% of the median per capita income. Subjective approach (developed by Leiden University, Netherlands) takes into account people’s own estimates of their welfare status. In terms of Kazakhstan, the author states that any one-dimensional approach will fail to estimate the real extent of poverty and deprivation of the population. International and national statistics fail to provide an accurate picture of the number of poor in the country and the dynamics of poverty. According to national and WB statistics, in recent decades Kazakhstan showed substantial progress in reducing poverty. However, this was achieved largely due to maintaining rather low official levels of subsistence and cost of minimum food basket. Establishment of these indicators is mainly determined by political considerations, thus it lacks objectivity. For a country aiming to improve competitiveness of its economy and to achieve the level and quality of life comparable to developed countries the focus on a poverty criteria that is close to the standards of the poorest developing countries is not acceptable. Actually, the poverty situation in Kazakhstan continues to be a serious challenge. This is evidenced by the materials of international statistics based on criteria of poverty for countries in transition; by a quite high proportion of household spending on food and the relatively low (as compared to many Eastern European countries) national poverty line. It is concluded that a large-scale poverty still persists in Kazakhstan despite high rates of economic growth.