Structural Сhanges and Labor Productivity Growth in the Economy of Kazakhstan

This work lies within two flows of literature. On the one hand, it considers growth in developing economy through the lens of structural changes (Diao, McMillan and Rodric, 2017). On the other hand, it considers consequences of planning system on growth of economy (Krugman, 1994; Easterly and Fisher, 1995). Using new historical data, the work answers the question of what was the impact of labor reallocation on growth of economy of one of the Soviet Republics, Kazakhstan in 1966-1989. It finds that Kazakhstan did not receive structural bonus. While Kazakhstan experienced productivity shocks, structural changes were insignificant. Model from (Diao, McMillan and Rodric, 2017) allows to interpret these empirical findings through increase of misallocation of resources. The novelty of the work is first, in using new historical data; second, in applying shift-share analysis to the Soviet Republic in planned period; third, is in offering a new explanation of Soviet economy slowdown – Soviet economy did not receive structural bonus, and labor was allocated inefficiently.