Agricultural Sector of the Republic of Kazakhstan in the Context of

Sustainable Development: Analysis of the General Condition and

Income Differentiation

Aitolkyn Sagynbayeva

, Abilda Symbat

and Saltanat Kondybayeva

Department of Economics, Al-Farabi Kazakh National University, Almaty, Republic of Kazakhstan

Keywords: Income Differentiation, Agriculture, Economic Growth, Agricultural Sector of Kazakhstan, Income

Inequality, Income of Agricultural Sector of Kazakhstan.

Abstract: The article is devoted to the agricultural sector of present Kazakhstan in the context of sustainable

development, as it considered as a significant part of the economic system. Agriculture has determinative

character in the economic development of the country. These days, the share of the population, who is working

in agriculture is declining as countries develop. The core aim of this research is to show a comprehensive

representation of the situation of agriculture in Kazakhstan, with a particular focus on income differentiation

and labor force developments in the agriculture sector. To achieve the goal of research work, a descriptive

method was used. The article reveals that due to low labor productivity and a large gap between income, there

is income differentiation in the agriculture sector of Kazakhstan. The achieved results from this article can be

used for evaluating the efficiency of various social policy tools both at the regional and national levels.

1 INTRODUCTION

One of the vital parts of the country is agricultural

sector, as it participates in making the economic

security, as well as the country’s food encouraging,

but also it forms the labor and settlement potential of

rural areas. For many developing countries, the

agricultural sector is a driver of economic growth.

In the Kazakhstani and overseas literature, there

are several research works devoted to the study of

unevenness and differentiation of income. However,

the issue of the income differentiation in the

agricultural sector raised the attention of the authors.

Because since the beginning 90th, the improvement

of the agro-industry and ensuring the economic

security and the nation’s food encouraging in the

direction of “go green” and sustainable development

is the most significant strategic farm duties of the RK.

The literature research proved, that the works in the

analysis of income differentiation especially in the

agricultural sector and the clarifying of reasons

affecting its condition and dynamics are lack. The

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main purpose of our research paper is to define

answers to these issues.

The authors like S Kuznets, N Kaldor, A. Sen, E

Atkinson and others considered the issues inequality

and income differentiation and based the foundations

for measuring them (Malkina, 2015). Income

differentiation is an important macroeconomic

category that shows the result of sustainable

economic development of the country, as well as the

results of social state policy. For evaluating income

differentiation widely used the Gini coefficient of

variation, A Theil and E Atkinson indices. Moreover,

the construction of Lorentz curves shows the dynamic

in income differentiation. This article uses the Gini

coefficient, as it provided by the Ministry of National

Economy of Kazakhstan.

2 MATERIALS AND METHODS

The research directed to analyze the situation of

agriculture in Kazakhstan from 2017 to 2019, with a

Sagynbayeva, A., Symba, A. and Kondybayeva, S.

Agricultural Sector of the Republic of Kazakhstan in the Context of Sustainable Development: Analysis of the General Condition and Income Differentiation.

DOI: 10.5220/0010590003190324

In Proceedings of the International Scientiﬁc and Practical Conference on Sustainable Development of Regional Infrastructure (ISSDRI 2021), pages 319-324

ISBN: 978-989-758-519-7

319

focus on agricultural income and labor force

development. Statistics were taken from the Ministry

of National Economy of the Republic of Kazakhstan.

This part introduces with a study of the significant

indicators, which belong to agricultural sector like the

growth dynamic, employment in this sphere and the

differentiation of incomes of the employees was

carried out. To achieve this research purpose authors

used descriptive research method

The important roles of agriculture in the country's

economic development are as follows (Kondybayeva,

2018):

 As it mentioned previously, the agricultural

sector has an important strategic role, as it

participates in the economic growth direction

of the country.

 In practice of developed countries, the

agricultural sector has already made a

significant contribution to the country's

economic prosperity.

 The agricultural sector has a vital importance

for the Third World Countries.

In recent years, the growth rate of global

agricultural production and productivity has slowed.

Currently, many countries around the world have

high levels of food consumption per person, but

growth will be limited over time due to lack of

adequate resources. But at the same time, a high

proportion of the world and developing countries

remain in absolute poverty. This means that there is

not enough income to convert their needs into

sufficient demand. And development in the agrarian

sector has an important role in developing the

economy, as it caused the increase in the profits of the

poor by creating jobs on farms and stimulating

employment outside agriculture.

According to S Kuznets, at the early stages of

industrialization, the income inequality rises, since a

small part of the workforce is employed in the

industrial sector. However, as workers continue to

migrate to higher-wage sectors of the national

economy, these high levels of inequality eventually

decline over time (Kuznets, 1955).

According to the definition of the economist D

Ray, economic inequality is “a fundamental

imbalance in which one person can freely make

certain material decisions, while the other is denied

the opportunity to make exactly the same economic

choice” (Ray, 1998). The causes of disproportion

phenomena may include income inequality, a

consequence of accumulated a person wealth

inequality, situations in society and opportunities in

country, etc. The great researchers E Atkinson and F

Bourguignon pointed out the material and non-

material components of economic inequality.

According to their works, the objects of material

inequality consist of income, consumer spending and

accumulated wealth. Nevertheless, the researchers

considered the existing difference and defined:

income and expenses are economic, and accumulated

wealth is reserves (Atkinson, 2015).

Thus, the differentiation of incomes of the

population is one of the most important and

determinative socio-economic categories that

characterize the level of uneven distribution of

material wealth between the individuals of the

country. Depending on the prevailing production

relations, the principle of distribution of the quantity

and share of the social product between groups and

strata of the population will be determined. In

capitalist society, income differentiation and

inequality is determined by the relationship between

the exploitation of goods and class inequality. Since

representatives of different classes of society have a

different type of income, accordingly, the

differentiation of incomes shows the dynamics of the

share of working people in the share of capitalists in

social wealth in accordance with the general laws of

capitalist accumulation.

In a market economy, income is also the main

category that reflects the social status of an

individual. In this regard, in order to maintain the

long-term sustainable development of the economy,

the state needs to regulate the distribution of income

in the correct way so that status advantages are

effectively reflected.

A state with rational income differentiation, due

to the large number of the middle class and intensive

social mobility in society, has the greatest

sustainability of economic development, and also

provides a strong incentive for social advancement

and professional growth of the population (Bobkov,

2005).

In this way, income differentiation of the

population is the result of the distribution of incomes

of the population of the state, which describes the

uneven level of distribution of public goods of society

and the difference in the level of income of different

segments of the population. In society, income

differentiation arises and is formed in connection with

various types of activities, various industries, as well

as under the influence of demographic, social and

political factors.

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320

3 RESULTS

The changes in volume of the gross output of the

agrarian sector of Kazakhstan for time period from

2017 to 2019 inclusive is considered and analyzed in

this section of paper.

For this, we will use the diagram below (Figure

1), which clearly shows the dynamics of these

indicators for the analyzed time period. Statistical

data was taken from the reports of the Ministry of

National Economy of the Republic of Kazakhstan

Figure 1: Dynamics of gross output of the agricultural

sector of Kazakhstan (billion tenge) in 2017-2019.

As you can see from the above diagram for the

analyzed time period, the following changes and

transformations took place in the changes in volume

of the gross output of the sector of agriculture in

Kazakhstan:

 the total gross output of the sector of

agriculture in the Republic of Kazakhstan

increased by 26.5% or 1080.2 billion tenge. In

2017 this indicator was 4070.9 billion tenge

and it increased to 5151.1 billion tenge at the

end of 2019, respectively;

 at the same time, the share of the total gross

output of the sector of agriculture in the GDP

of Kazakhstan remained virtually unchanged,

decreasing from 7.49% in 2017 to 7.41% at the

end of 2019. A positive factor is the growth of

this indicator by the end of 2019 compared to

2018 by 0.17 percent, from 7.24% to 7.41%.

In general, the agricultural sector of Kazakhstan

determines an important role in economical balance

of Kazakhstan in key areas of development and it is

developing at the same level of the mining,

processing and heavy industries.

The volume of crop and livestock production in

Kazakhstan has a stable growth and testifies to an

increase in demand in the home market and also in

foreign markets for products of the sector of

agriculture in the state.

To identify the advancement and development of

the crop production industry within the agrarian

sector of Kazakhstan, we will analyze the dynamics

of the gross harvest of the major agrarian crops in

Kazakhstan in 2017-2019. (Figure 2).

Figure 2: Gross harvest of major crops (thousand tons) in

Kazakhstan in 2017-2019.

As a result, it is possible to identify that the crop

production in agrarian sector of Kazakhstan, there is

a redistribution in favor of products with a high level

of added value - most crops (except for cereals)

demonstrate stable growth within the framework of

an increase in their gross harvest.

We will use the diagram below (Figure 3), which

clearly analyze the dynamics of exports of products

of the agrarian sector of Kazakhstan (million US

dollars) from 2017 to 2019 inclusive.

Figure 3: Dynamics of export of products of the agricultural

sector of Kazakhstan (million US dollars) in 2017-2019.

As you can see from the above diagram for the

analyzed time period, the following changes and

transformations occurred in the dynamics of export

volumes, products of the agrarian sector of

Kazakhstan from 2017 to 2019 time period:

 the total volume of production of the agrarian

sector of Kazakhstan increased by 39.7% or

USD 808.1 million, from USD 2037.1 million

to USD 2845.2 million at the end of 2019,

respectively;

 in the total amount of exports of Kazakhstan,

the overall level of total share of exports of

Agricultural Sector of the Republic of Kazakhstan in the Context of Sustainable Development: Analysis of the General Condition and

Income Differentiation

321

agricultural sector products increased by 0.7

percentage points. In 2017 this indicator was

4.2% and increased to 4.9% at the end of 2019,

respectively.

In the medium-term period of development of the

national economy agrarian sector of Kazakhstan has

a high degree of potential of this industry, which has

a stable growth in the volume of exports of products

of the agricultural sector and an increase of indicator

of volumes of exports of products of the agrarian

sector in the total volume of exports of Kazakhstan.

For the purpose of substantively disclose the

export orientation of agricultural products of

Kazakhstan to key markets, we will analyze the

export of products of the agricultural sector of

Kazakhstan for the time period from 2017 to 2019,

we will use the diagram below (Figure 4).

Figure 4: Structure of exports of products of the agricultural

sector of Kazakhstan (million US dollars) in 2017-2019.

In accordance with the above diagram, it can be

determined that in the structure of volumes, exports

of products of the agrarian sector of Kazakhstan from

2017 to 2019 time period, the following changes and

transformations took place:

 the amount of exports of products of the sector

of agriculture in Kazakhstan to the CIS

countries increased by 56.4% or 545.3 million

US dollars. In 2017 this indicator was 967.3

million USD and at the end of 2019 increased

to 1512.6 million USD;

 the amount of exports of products of the

agriculture of Kazakhstan to other countries

increased by 24.7%;

 the share of exports of products of the sector of

agriculture in Kazakhstan to other countries

decreased by 5.7 percentage points, from

52.5% in 2017 to 46.8% at the end of 2019,

respectively.

In general, according to the research made it is

possible to determine that at the current time there is

a differentiated and systematic development process

of the agriculture of Kazakhstan. And It is manifested

in a stable growth in the volume of manufactured and

exported products of this sector of the national

economy.

4 DISCUSSION

After studying the development and position of the

agrarian sector of Kazakhstan, a descriptive analysis

was carried out on inequality and income

differentiation in this sector. The structure of

employment, the volume of income and wages has a

direct immediate effects and impact on the

differentiation of incomes and the welfare and

prosperity of the society and population, in addition

to the development of the economy as a whole.

Economic development, as well as income

differentiation is always influenced by the structure

of employment, income and wages level.

Income differentiation is an important

macroeconomic category that shows the result of

sustainable economic development of the country, as

well as the results of social state policy. The wages of

the population have an important and decisive

influence in determining the differentiation of

income, since wages are the main form of income for

the majority of the population that works in hired

labor and is part of the employed population.

Inter-sectoral and intra-sectoral differentiation of

wages is a crucial and important factor in the

differentiation of population by income.

Inter-sectoral differentiation in wages arises in

connection with the intensive growth of wages in

priority sectors and spheres that have great export

demand and potential (fuel and energy complex) and

the financial and economic sector, and on the other

hand, due to stable wages in social spheres (like

education, culture, health care) and agricultural

sector.

Intra-industry differentiation of incomes

unjustified differentiation of wages in each sector of

the economy is also growing significantly.

The changes in volume of employment in

agriculture in the Republic of Kazakhstan has a

negative trend, as there is a small outflow of labor

(Figure 5).

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Figure 5: Employment in the agrarian sector.

As stated in the report of Ministry of National

Economy of Kazakhstan, since 2009 there has been

an outflow of labor by almost 2.2 times. In this sector,

the average annual growth rate of employment

decrease from 2009 to 2019 time period was 6.4%,

which is a very high indicator compared to other

sectors of the economy. According to statistics in

2019, employment in agriculture is 1.2 million

people.

The peculiarity of the agrarian sector in

Kazakhstan is that there is a large number of self-

employed (64.6%).

The level of income in the agricultural sector is

directly dependent on labor productivity. According

to statistics, in 2019 labor productivity amounted to

2,077 thousand tenge. This indicator has an annual

positive growth rate, but labor productivity in

agrarian sector by way of comparison with other

sectors of the economy is lower.

In the agrarian sector of Kazakhstan, there is a low

level of wages (Figure 6). In agriculture, in 2019, the

average monthly wage was 115,371 tenge, and

compared to 2018 year the growth rate was 17.8%.

This indicator for the time duration from 2017 to 2019

rised up by 1.3 times. Thus, the country's agricultural

sector is the leader in terms of average annual wage

growth rates and is 11.4%. However, the average

monthly wage of population in the state is 186,815

tenge, but there is a gap, which is about 71 000 tenge,

and it is 1.6 times more than salary in agricultural

sector.

Figure 6: Average monthly wages (amount in tenge).

Social inequality, which is measured by income

differentiation, depends not only on the industry and

the development of the country, but there are also

many social factors, such as the level of education in

the studied industry. The agricultural sector of

Kazakhstan and also of the countries around the

world is defined by a less highly skilled labor force.

Almost half of all employed in agriculture (47%)

have only primary, basic, secondary general

education. According to statistics, only 13% of

employers has higher education in the sector of

agriculture in Kazakhstan. The study revealed the

socio-economic stratification of the regions of the

Republic of Kazakhstan, as well as a large inequality

in wages of the population by industry and spheres of

the economy.

5 CONCLUSION

Our research can be concluded that the number of

people employed in agriculture is decreasing every

year. Such a negative tendency is observed not only

in Kazakhstan, but also in every countries around the

world. According to this fact, there is an uneven

distribution, a large level of income gap compared

with other sectors of the economy, as well as low

labor productivity affects to the income

differentiation of the population of Kazakhstan.

In general, according to the research made it is

possible to determine that at the current time there is

a differentiated and systematic development process

of the agriculture of Kazakhstan. And It is manifested

in a stable growth in the volume of manufactured and

exported products of this section of the national

economy.

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Income Differentiation

323

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