The illusion of processed exports in Kazakhstan

From 2014 to 2024, Kazakhstan’s export structure has formally become more “processed,” at least on paper. According to customs data based on the Broad Economic Categories (BEC) methodology, the share of raw materials in Kazakhstan’s exports fell from 77% in 2014 to 65% in 2024. At first glance, this looks like progress – a sign of gradual diversification and growth of the manufacturing sector. However, this decline in the raw material share is not only due to an increase in processed exports, but also to a drop in the overall volume of raw exports – from $61 billion in 2014 to $53.1 billion in 2024 (a 13% fall).

In other words, the share of “non-raw” exports grew statistically, because the raw material base shrank amid external shocks – lower global prices, logistical disruptions, and trade re-routing. To truly assess industrial growth, the composition of these “processed” goods needs a much closer look.

What Counts as “Processed” Often Includes Raw or Re-Exported Goods. Under the BEC classification, processed goods include both intermediate products (semi-finished goods) and final goods. But in practice, this category also captures lightly processed products (“almost raw materials”) and re-exported items that Kazakhstan does not produce at all. For instance, in 2024 Kazakhstan’s top “non-raw” exports included natural uranium, copper cathodes, ferrochrome, zinc, silver, and aluminum.

These are not deeply processed goods – they are basic commodities with minimal value-added. By my estimate, such “semi-processed” items make up roughly 52% of all officially classified processed exports, or $14.9 billion out of $28.6 billion. So while the government reports rising exports of processed goods, most of this “growth” actually comes from metallurgical products and other materials with little transformation.

Re-Exports Disguised as Local Processing. Another layer of distortion comes from re-exported goods – high-tech consumer items like smartphones, computers, household electronics, and even aircraft, which Kazakhstan does not manufacture. In 2024, the estimated volume of such re-exports reached $2.9 billion, or around 10% of the country’s reported processed exports.

For example, official export data claimed that Kazakhstan exported:

• ⁠ ⁠20 aircraft worth $887 million,
• ⁠ ⁠1.45 million smartphones worth $390 million,
• ⁠ ⁠22 jet engines (thrust over 25 kN) worth $159 million,
• ⁠ ⁠and 117,000 color monitors worth $47 million.

Clearly, these are not locally produced goods – they are simply being transshipped through Kazakhstan.

Kazakhstan as a Transit Hub. Western sanctions on Russia have effectively turned Kazakhstan into a transit channel for many goods that used to pass through Russia. Since 2022, wholesale shipments of various foreign-made goods now flow through Kazakhstan and Central Asia. This “paper” increase in exports does not reflect real industrial expansion – it merely shows that Kazakhstan has become a re-export and logistics hub, not a manufacturing center.

Real Processing Barely Grows. After excluding re-exports and “almost raw” goods, Kazakhstan’s true processed exports in 2024 amount to just $10.8 billion, not the official $28.6 billion. That means the real share of processed goods drops from 35% to just 13% – nearly three times lower. Since 2014, the adjusted figure for processed exports has grown by only $1.8 billion (from $9.0 to $10.8 billion), or about 20% in ten years.

Most of that increase occurred in 2022, when exports jumped from $7.8 billion to $10.9 billion – a rise likely tied to trade rerouting, not industrial breakthroughs. In the short term, such trade flows can bring profits to certain companies. But they do not strengthen local production capacity or boost Kazakhstan’s competitiveness in global markets.

Diversification on Paper, Not in Practice. All this suggests that Kazakhstan’s export diversification since 2014 has been mostly formal. If we include “almost raw” goods, the combined share of raw and semi-raw materials in total exports fell by just 4 percentage points – from 87% to 83%. The apparent increase in “processed” exports is mostly a statistical illusion, driven by methodological quirks and re-export accounting.

Refocusing State Support on Real Value-Added Production. Given this reality, an important question arises: should government export-promotion policies target real manufacturing exports – the 13% that remains after removing semi-raw and re-exported goods?

Producers of semi-processed materials are already competitive on global markets without state aid. Support measures should instead prioritize high-tech, deeply processed industries that truly add value and build industrial capacity. At the same time, Kazakhstan might need to acknowledge current limitations: deep processing is often uncompetitive today.

A more pragmatic approach would be to move gradually up the value chain – one step at a time – focusing on products just beyond raw materials, such as cathodes, ferroalloys, and concentrates. This step-by-step strategy would help develop industries with faster payback, build local expertise, and lay the groundwork for more advanced, technology-intensive manufacturing in the future.