Local Government and Economic Development in Kazakhstan by Madina Junussova A thesis submitted to the Faculty of Graduate and Postdoctoral Affairs in partial fulfillment of the requirements for the degree of Doctor of Philosophy in Public Policy Carleton University Ottawa, Ontario © 2017 Madina Junussova ABSTRACT The main objective of this dissertation is to understand the role of local government in economic development, with a focus on the cities and regions selected by the national government of Kazakhstan to be the drivers of national economic development by the Regional Development Program 2020. The dissertation presents three studies based on qualitative assessment of locally obtained evidence and locally produced data. The first essay examines administrative decentralization and studies how the Almaty city and Almaty region governments failed to use delegated urban planning for the management of urban development. The second essay challenges the fiscal system by exploring how the Almaty and Astana governments struggled to use national transfers provided for the implementation of national projects. The third essay focuses on political decentralization reforms and assesses the capabilities of elected representatives from Almaty, Astana, Shymkent and Aktobe city governments in managing urban transport based on public needs. Together, these three case studies provide a broader picture for understanding the productivity of the implemented administrative, fiscal and political reforms. It argues that the absence of a functioning decentralization strategy is leading to unexpected development outcomes and a lowering of public trust in local and national governments. The main contribution of the three studies is that they allow identification of key institutional weaknesses and obstacles faced by local governments in the management of local development in Kazakhstan. ii ACKNOWLEDGEMENTS I would like to thank my Committee Members: my supervisor Professor Leslie A. Pal from Carleton University, Professor Christopher Stoney from Carleton University, and Professor David Amborski from Ryerson University. The excellent support, critical comments, and encouragement they provided throughout the work on the three essays and final dissertation were invaluable. The studies conducted were made possible thanks to the funding from the Central Asian Faculty Development Program (CAFDP) of the University of Central Asia. I wish to express my special appreciation to Bohdan Krawchenko and Roman Mogilevskii from the Institute of Public Policy and Administration of the University of Central Asia for their patience and continued support. While writing my first essay, I benefited from critical feedback received from colleagues during my stay at the Leibniz Institute for Regional Geography. Thanks to the invitation from the Organisation for Economic Co-operation and Development (OECD) colleagues, I was able to integrate some of the first and second essays’ findings in the OECD’s Urban Policy Review of Kazakhstan (2017). I appreciate valuable comments and feedback received from my long-standing mentor Judith Ryser and other colleagues from the International Society of City and Regional Planners. Finally, I would like to thank my family: my mother, Svetlana Burtaeva and my sister Gulnara Junussova, who took a great load off my shoulders by taking care of my family when I was on field trips; my husband, Yelbossyn Babalyk, who constantly supported my every step and believed in the importance of my research; and my daughters Zagira and Zhanel Babalyk, who, despite being only 9 and 6 years old, respectively, could understand the value of all three studies. iii TABLE OF CONTENTS Abstract ............................................................................................................................... II Acknowledgements ............................................................................................................ III Acronyms.......................................................................................................................... VII List of tables .................................................................................................................... VIII List of figures ..................................................................................................................... IX CHAPTER 1: INTRODUCTION TO THE ROLE OF LOCAL GOVERNMENT IN KAZAKHSTAN………………………………………………………………………….1 1.1 RATIONALE OF THE STUDY ........................................................................................ 1 1.2 COUNTRY BACKGROUND AND CASE STUDIES ............................................................. 3 Country background ................................................................................................... 3 Case studies ................................................................................................................ 6 1.3 LOCAL GOVERNMENT AND DECENTRALIZATION REFORMS ....................................... 12 The changing roles of locally elected politicians in Kazakhstan .............................. 12 Administrative decentralization of urban planning .................................................. 16 Fiscal decentralization and financing of urban development................................... 21 1.4 THEORETICAL BACKGROUND AND RESEARCH APPROACH ......................................... 26 CHAPTER 2: PLANING OF URBAN DEVELOPMENT: THE CASE OF ALMATY CITY AND ALMATY REGION ................................................................ 30 2.1 INTRODUCTION......................................................................................................... 30 2.2 ADMINISTRATIVE DECENTRALIZATION AND URBAN PLANNING ................................ 32 Research approach ................................................................................................... 34 iv 2.3 PLAN PRODUCTION ................................................................................................... 37 National guidelines versus local needs ..................................................................... 37 Norms versus environmentally friendly and publicly acceptable development ........ 44 2.4 FROM PLANNING TO IMPLEMENTATION .................................................................... 47 Regulatory power of genplan and expert community ............................................... 47 Planning without the budget for implementation...................................................... 49 Planning detached from land-use management ........................................................ 52 Alternative use of planning: city versus region ........................................................ 56 2.5 CONCLUSION ............................................................................................................ 62 CHAPTER 3: NATIONAL INVESTMENT IN URBAN DEVELOPMENT: IN THE CASE OF ALMATY AND ASTANA CITIES ............................................................. 65 3.1 INTRODUCTION......................................................................................................... 65 3.2 MEGAPROJECTS AND FINANCIAL SUSTAINABILITY OF URBAN DEVELOPMENT .......... 68 Research approach ................................................................................................... 70 3.3 COSTLY FACILITIES WITH EXCEPTIONAL DESIGN, LACKING LOCAL CAPACITIES TO WORK FOR CITIES ........................................................................................................... 73 Hosting one event in two cities and the increased amount of public spending ........ 74 The efficiency of public investment in the ASIADA-2011 was constrained by the lack of qualified people..................................................................................................... 77 Almaty city won a chance to host UNIVERSIADE-2017: Astana city was given the EXPO-2017 ............................................................................................................... 82 3.4 SHORT-TERM BENEFITS WITH LONG-TERM ECONOMIC CONSEQUENCES .................... 87 v The UNIVERSIADE-2017 and unfulfilled plans on the development of transport infrastructure ............................................................................................................ 87 Inadequate planning and implementation of national projects leads to the decrease of trust between citizens and city governments ......................................................... 90 3.5 CONCLUSION ............................................................................................................ 96 CHAPTER 4: THE ROLE OF LOCAL DEPUTIES AND BUREACRATS IN MANAGEMENT OF URBAN TRANSPORT ............................................................. 98 4.1 INTRODUCTION......................................................................................................... 98 4.2 POLITICAL DECENTRALIZATION AND THE ROLE OF LOCAL DECISION-MAKERS........ 100 Research approach ................................................................................................. 101 4.3 INABILITY OF ELECTED POLITICIANS TO BE INDEPENDENT FROM LOCAL BUREAUCRATS AND ITS OUTCOME ON LOCAL DEVELOPMENT ............................................................... 102 Deputies informally dependent on civil servants of Akimat .................................... 103 Deputies combining public position with own business ......................................... 107 4.4 INCAPACITY OF LOCALLY ELECTED POLITICIANS