While oil and gas are the mainstay of the economy, a growing industrial matrix is providing fresh areas of growth.

The government of Kazakhstan, in late May 2014, signed an agreement to leverage about $2.7 billion from its oil fund, Samruk-Kazyna, to enable around $5 billion in financing from international multilateral lenders for projects to diversify Kazakhstani industry and enhance competitiveness. The lenders are the European Bank for Reconstruction and Development (EBRD), the Asian Development Bank (ADB), and the World Bank. The prime mover on the deal was newly appointed Prime Minister Karim Massimov, whom President Nursultan A. Nazarbayev appointed in April with a special charge to focus on the economy. Elsewhere, in February 2014, Kazakhstan devalued its currency, the tenge, by 18.9%, a move the President referred to as an instrument for growth.

According to a World Bank report published in April 2014, manufacturing accounts for 11% of GDP and agriculture 5%. The Statistics Agency reports that energy and mining together, with about equal shares, account for over half of GDP. Meanwhile, oil and natural gas make up a whopping 78% of exports.

In 1Q2014, Kazakhstan exported 20.3 million tons of crude and condensed gas, up 22% from the same period a year earlier, accounting for $16.7 billion of the total $22.6 billion in exports. Other exports include ferrous metals, copper, aluminum, zinc, and uranium. Kazakhstan's main export markets in order of their share of total exports are, according to state sources, China (19%), Italy (17%), Russia (8.4%), and the Netherlands (8%). Other export countries include France, Switzerland, Ukraine, and Canada.

Kazakhstan's imports reached a record high $4.7 billion in December 2013 and were $3 billion in March 2014, according to the Statistics Agency. The country mainly imports electronics, machinery, and appliances, which represent 25% of total imports, mineral products (15%), transport equipment (12%), base metals (10%), chemicals (8%), and foodstuffs and beverages (6%). The countries importing most are Russia, with 41% of total imports, and China (14%). Other important trade partners include Germany, Italy, Turkey, Ukraine, and the US.

Kazakhstani industry and manufacturing is centered in three main cities. The capital Astana, besides being the seat of government, also supplies construction blocks and other cement products. Almaty hosts more agriculture and agro-processing facilities, while the oil and gas city of Atyrau can boast of Chevron's Atyrau Polyethylene Pipe Plant and Atyrau Valve Plant, both of which also export to Russia. Mining contributes a slightly higher share of GDP than oil and gas and is practically omnipresent. The region of Akmola is important for agriculture and agro-processing as well as for uranium and gold mining—the oblast also features chemical and pharmaceutical plants and produces construction materials.

The ADB held its annual board of governors meeting in Astana in May 2014, at which President Nursultan A. Nazarbayev renewed his commitment to the national strategy plan to develop Kazakhstan into one of the world's top-30 economies by 2050. The government, in 2011, contracted with the ADB to advise it on the best way to move forward on diversifying the country's industrial base. The result was an October 2013 report on Policies for Industrial and Service Diversification in Asia in the 21st Century, which summarized the challenges facing Kazakhstan and the best policy options, especially given the country's high resource endowment and low population density. The report cites findings from the UN Industrial Development Organization (UNIDO), which suggests that the country faces limits on how much it can reasonably diversify, but notes that Kazakhstan could conceivably double its diversification to compete at the level of Belarus, Brazil, Chile, Russia, and Indonesia.

The ADB report also noted the importance of the private sector to diversifying a country's manufacturing base—key to overall economic development—and also the huge impact that state regulations can have on business, such as when the state, in 2012, imposed sales taxes on second-hand cars, which overnight transformed the local automotive industry. Russian Ladas assembled in Kazakhstan top the sales charts and global automotive leaders such as Toyota, Renault-Nissan, and Russia's largest carmaker, OJSC AvtoVAZ, are all considering opening assembly plants in the country.

Kazakhstan's approaching high-income status precludes relying on cheap labor as a competitive advantage, and the country is looking to leverage FDI to gain access to high technology. Advisers to the government, including the World Bank and the EBRD, warned of the dangers of making too easy terms with multinational companies, advising on evaluation and compliance measures and concluding that sometimes it is more effective to pay royalties for needed technology rather than hope for results from increased R&D spending. The ADB cautioned the government, “that no country has achieved high-income status without its manufacturing sectors reaching at least an 18% share of total employment and output over a sustained period of time."

The World Bank's Doing Business 2014 report ranks Kazakhstan 50th among 189 countries, moving up three places compared to the previous year and ahead of most other CIS countries. For comparison, the report ranks Russia 92nd and Belarus 63rd. At a separate event in May, a representative of the Ministry of Economy and Budget Planning, Aliya Alimbetova, was reported in the local press as saying that total FDI since independence, up to the end of 2013, had reached $180 billion, and that trade last year totaled about $132 billion. According to Alimbetova, companies from the Netherlands, the US, the UK, France, Germany, Italy, Russia, China, Canada, Switzerland, and Japan have invested the most.

Despite robust foreign investment, R&D spending needs to be increased, and the ADB report emphasized the importance of improving the quality of higher education and vocational training: “In terms of school enrollment, Kazakhstan is comparable with advanced economies. However, the quality of its higher education and training—such as its management schools as well as math and science education—lags far behind countries with a similar income level." The consultants also noted the need to improve infrastructure, including roads, railways, and electricity generation.

Modern infrastructure is indispensable in connecting domestic markets and also in reaching untapped markets beyond the country. One study estimated that “improving Kazakhstan's transport infrastructure could reduce road travel time between provincial capitals by 35%, rail line-haul time by 71%, and intermodal rail and road container shipment costs by 24%." Kazakhstan has received World Bank financing for several key infrastructure projects, including work on the main east-west highway that connects Europe to Russia and China.

Coinciding with the ADB meeting in Astana, the Invest in Kazakhstan Forum featured the Minister of Economy and Budget Planning Yerbolat Dossayev, who said Kazakhstan planned to make itself more attractive to investors by establishing one-stop shop investment facilities and 90-day visas for current and potential investors.

The Astana Economic Forum was also held in May 2014. At the event, Askar Mamin, the head of Kazakhstan Temir Zholy, Kazakhstan's national railway company, said that 1,200 kilometers of new railroad will come into operation by the end of this year, including 1,000 kilometers of new rail on the Zhezkazgan-Beyneu route. He said that rail traffic capacity with China had increased 20% in 2013 and would double by 2020, increasing company revenues and possibly creating hundreds of thousands of new jobs in related industries.

Also speaking at the Forum, Deputy Prime Minister and Minister of Industry and New Technologies Asset Issekeshev projected that petrochemicals and chemical exports derived from gas would reach $2.5 billion and account for 5% of total manufacturing by 2019. The Deputy PM said that although petrochemicals was practically a new industry in Kazakhstan, the government plans to modernize all three refineries by 2017 and increase refined output to 19 million tons per year to meet all domestic demand for Euro-4 and Euro-5 petrol, jet fuel, and other fuels.

The State Program on the Accelerated Industrial–Innovative Development of the Republic of Kazakhstan, 2010–2014 (SPAIID) was a five-year plan that targets seven sectors: agriculture; chemicals and pharmaceuticals; construction and construction materials; energy; mining and metallurgy; and transport and telecommunications infrastructure. Despite the economy's continued reliance on oil and gas as a revenue source, the government is hard at work to promote growth in the industrial matrix, certainly piquing the interest of investors.