THE EMERGENCE OF KAZAKHSTAN’S POLICY-DRIVEN SOVEREIGN WEALTH FUND: ECONOMIC CONCENTRATION OR DIVERSIFICATION?

Sovereign wealth funds (SWFs) are national assets accumulated from commodity exports or foreign reserves, serving strategic development purposes deemed important by the state. In resource-rich countries, these funds are often justified by the need to stabilize the economy, self-insure against unforeseeable future risks, and allocate financial resources to selected domestic sectors for economic diversification, thereby mitigating the problem of the "resource curse." This paper examines the inception and implementation of Kazakhstan's two major sovereign wealth funds: the National Fund of the Republic of Kazakhstan (NFRK), established in 2000, and the Samruk-Kazyna fund (SKF), founded in 2008. It argues that the profit-driven NFRK helped stabilize Kazakhstan’s economy during the financial crisis of 2007 and 2008. The subsequent formation of the elite-managed and policy-driven SKF was aimed at facilitating economic diversification. However, SKF’s domestic asset portfolio indicates a tendency to concentrate state control and ownership in the resource sector. A case study of agricultural development in Kazakhstan further highlights that the lack of transparent governance, local scrutiny, and industry-specific policies has hindered SKF’s role in promoting domestic economic diversification, development, and structural transformation.