Evaluating the Impact of Corruption on the Development of Entrepreneurship in Kazakhstan

Tatyana Kudasheva, D. Zh. Rakhmatullayeva

2026

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DOI 10.1007/978-3-032-28163-0_15
Data confidence 70 medium
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Abstract

This chapter examines the impact of corruption on entrepreneurship and the business environment in Kazakhstan, addressing a central puzzle in the literature on governance and economic development: why corruption persists in shaping entrepreneurial activity despite formal institutional reforms. Drawing on a mixed-methods research design, the study combines evidence from a nationwide survey of 702 entrepreneurs conducted in 2023 with 15 semi-structured in-depth interviews across key economic sectors. This approach enables a nuanced analysis of both the structural and experiential dimensions of corruption and its uneven effects across firm sizes and industries. The findings demonstrate that corruption remains a systemic and highly salient barrier to investment and business development in Kazakhstan. Rather than functioning as a productivity-enhancing mechanism, corruption operates primarily as a “sand in the wheels,” raising operating costs, distorting competition, and eroding trust in regulatory and judicial institutions. Small and medium-sized enterprises, particularly sole proprietors and peasant farms, are disproportionately exposed to corrupt practices due to their limited administrative capacity and dependence on discretionary enforcement. Sectoral analysis reveals that construction, energy, extractive industries, and logistics are especially vulnerable, reflecting intensive interaction with state authorities in licencing, taxation, and customs procedures. In contrast, more digitalised and compliance-intensive sectors, such as finance and information technology, exhibit lower corruption exposure. By providing a sector-specific and firm-level assessment within a single national context, the chapter contributes to the “grease versus sand” debate and advances existing research on corruption and entrepreneurship in post-Soviet economies. The results highlight that any short-term coping benefits associated with informal practices are outweighed by long-term institutional damage. The chapter underscores the importance of reducing discretionary power, strengthening regulatory transparency, and enhancing legal protection to foster a predictable and inclusive business environment in Kazakhstan.