IMPACT OF POLITICAL AND ECONOMIC INDICATORS ON NEW BUSINESS FORMATION: EVIDENCE FROM KAZAKHSTAN

Abstract

Entrepreneurial activity has long been recognized as an essential indicator of the country's economic and institutional state. This issue is particularly acute in emerging economies, where the launch of new enterprises depends on market and political, institutional, and macroeconomic conditions. Kazakhstan is a good example of a country that, on the one hand, has great economic potential. However, it faces challenges related to the quality of institutions, diversification, and sustainable growth.

The study aims to assess the impact of governance indicators, trade openness, GDP, and foreign direct investment on the formation of new enterprises in Kazakhstan. To do this, the authors took data from the World Bank and national statistical databases for 2006-2020 and tested them using linear regression. The model results showed that FDI does not affect the formation of new companies in Kazakhstan, since most are directed to the extractive industries of the national economy. At the same time, trade openness contributes to SMEs' development, despite the governance indicator's reverse effect. It was puzzling that economic growth does not stimulate small businesses in Kazakhstan.