Some problems of economic diversification in the regions of the Republic of Kazakhstan (on the example of the Mangystau region)

Abstract

Economic diversification has become an important development goal for middle-income countries, especially those that depend on commodity exports such as Chile, Peru, Saudi Arabia and Kazakhstan. Given past research, the obvious intuition is to follow a pragmatic strategy focused only on related activities.

For the most part, researchers working on network diffusion use strategies focused on nodes with certain characteristics, such as highly connected nodes or central nodes. Our results show that in this case, these strategies are far from optimal, since optimal strategies must change which nodes to focus on at each step.

But the study was not limited only to finding a theoretical optimum. Theoretical strategies are also compared with the empirical behavior of countries, as they diversify their products and research activities into networks of related products and research areas.

We used mathematical models and simulations to compare several strategies for economic diversification. They found that always focusing on «quick        income» — related activities — is not an optimal choice. Instead, the researchers found that countries can achieve more by using dynamic strategies, focusing on related products at the beginning and end of the development process, but switching to more unrelated activities when they reach an average level of development.