Abstract

This paper examines sources of growth and structural change in two major Central Asian economies—Kazakhstan and Uzbekistan—over 2000–2024. While both countries achieved steady GDP growth and increases in output per worker, the structural change patterns do not necessarily move in the same direction. To study this, we combine standard growth accounting with sectoral growth accounts and a structural change decomposition across agriculture, industry, and services. Using World Bank World Development Indicators, we decompose output growth into contributions from capital, employment, and total factor productivity (TFP), and then connect these results to sectoral productivity and labor reallocation.

Aggregate results show that Kazakhstan’s growth was largely maintained by TFP—especially in the early 2000s—consistent with a commodity-driven expansion, while capital accumulation and employment played smaller roles. Uzbekistan’s growth, in contrast, is more accumulation-led, with stronger contributions from capital deepening and employment growth and more moderate productivity gains. Sectoral accounts indicate distinct trajectories across sectors in both economies. Structural change decompositions show that strong aggregate and sectoral growth did not automatically translate into productivity-enhancing labor reallocation: Kazakhstan displays positive static reallocation but negative within and dynamic components, while Uzbekistan shows mixed outcomes, with more favorable dynamic reallocation only after 2012. The findings underline that growth without labor movement into dynamic sectors is associated with weak or even negative structural change outcomes.