A global value chain approach to economic diversification and resilience in resource-rich states: the case of Kazakhstan

David R. DeRemer, Venkat Subramanian and Aigerim Yergabulova
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David R. DeRemer: Nazarbayev University, Graduate School of Business
Venkat Subramanian: Nazarbayev University, Graduate School of Business
Aigerim Yergabulova: Nazarbayev University, Graduate School of Business

No 2025/05, Working Papers from Nazarbayev University, Graduate School of Business

Abstract: The global value chain (GVC) approach offers valuable insights for resource-rich states pursuing economic diversification and enhanced resilience, due to its strengths in analyzing how policy shapes the tasks and linkages of state-owned enterprises (SOEs). By examining how state roles affect SOEs, we gain insights for diversification policy through economic upgrading analysis and resilience policy via a multi-level perspective. Drawing on the case of Kazakhstan before and after the shocks of the Russia-Ukraine war and the COVID-19 pandemic, we analyze two contrasting sectors engaged in GVCs: uranium, an advantaged resource sector where the sovereign wealth fund (SWF) owns the key producer, and medicines, a disadvantaged non-resource sector where a state-owned firm is the key buyer. Our upgrading analysis of pre-shock policies in the uranium case shows that a SWF-facilitated transformation improves diversification, while in the medicine case, policy interventions through the state-owned firm yield diversification limited to state priorities. Our resilience analysis of post-shock policies reveals that in both cases, state interventions created unintended consequences for the resilience of firms and GVC, hindering GVC rebalancing and prompting strategic firm responses to mitigate adverse impacts. Our study suggests that state policies for resilience could better internalize these unintended consequences.

Keywords: Global value chains; Industrial policy; Emerging markets/countries/economies; Economic diversification; Industrial upgrading; Resilience; Sovereign wealth funds; Privatization; Public procurement; Case-theoretic approaches (search for similar items in EconPapers)
Pages: 29 pages
Date: 2025-06
New Economics Papers: this item is included in nep-inv
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