An Analysis of Income Inequality in Central Asian Countries: Kazakhstan, Kyrgyzstan and Tajikistan

2019 - October

Topic of the September roundtable was “An Analysis of Income Inequality in Central Asian Countries: Kazakhstan, Kyrgyzstan and Tajikistan”. The expert was Ms. Nurgul Akimova, an economist with more than 10 years of experience in developing, coordinating and monitoring government programs as well as experiences in preparing the regulatory framework, including laws and national programs. She has five years of experience in managing projects funded by international organizations, consulting and accounting services for entrepreneurs, conducting research studies in entrepreneurial fields. Moreover, she possesses strong financial management skills.

The article presented an analysis on income inequality in Central Asian economies, and incomes in these economies were compared. Income inequality was an inevitable consequence of the transition to a market economy and the collapse of socialist countries. Internationally comparable data on household budget surveys was used.

The article analyzed the statistical indicators of monetary income of the population in Central Asian countries, particularly Kazakhstan, Kyrgyzstan and Tajikistan. Due to geographical proximity, similarity of socio-political and socio-economic backgrounds of the countries in the region, the cross-country analysis approach was chosen.

The research question of this study is to what extent the income is varied in selected Central Asian countries. As the analysis of the study revealed, the hypothesis that economies with relatively higher amount of GDP have a better life was not supported, since it was found that inequality coefficients in Kyrgyzstan and Kazakhstan are equal, where, it is comparably high in Tajikistan. At the same time, together with public relation convergence, inequality in terms of the lack of access to the sea, household income from labor migrants and a relatively lower level of dependence of the economy on hydrocarbons is similar in Kyrgyzstan and Tajikistan. The analysis of macroeconomic indicators and the application of existing theories related to inequality made it possible to determine the model of socio-economic structures in the countries under consideration.

According to expert Reasons for income inequality:

1. Hereditary prerequisites, for example, the availability of resources, skills and the presence of giftedness;
2. Human capital in the guise of highly qualified qualities, the presence of experience in one of the activities, the degree of education. These factors are acquired by the individual during his life;
3. Labor aspirations of workers, their interest in work;
4. The presence or absence of a market restriction in rights;
5. Luck and other reasons that affect decision-making by an economic entity and determine the outcome of its activities;
6. Various success, the application of factors of production (for example, an employee of a company manufacturing a scarce product can gain higher income than his/her colleague of the same qualification working in a company whose products are difficult to sell).

This event was sponsored by The Nippon Foundation (TNF) and Japan Central Asia Friendship Association (JACAFA)