Kazakhstan’s Single-Industry Towns: The Legacy of a Large System

How does Kazakhstan’s single-industry dependence differ from the global pattern, and why does a shorter official list not necessarily mean the crisis is over?

In 2012, Kazakhstan officially had 27 single-industry towns. Now, 19 remain on the list. This arithmetic tempts one to draw a simple conclusion: the number of dependent towns is shrinking. However, Saran left the category after the launch of new production facilities, Arkalyk — after the shutdown of the enterprise it had been built around, and Ekibastuz — while retaining a powerful coal and energy complex. The same change in status conceals three different economic processes.

The problem of Kazakhstan’s single-industry towns begins before the current registries. Most of them were built within the Soviet territorial-production system. The state placed extraction near the deposit, processing where there was energy and water, and machine building near major industrial hubs. The city had one function in the chain, guaranteed demand, and infrastructure. After the collapse of the common system, each link found itself within new borders, with new owners and market prices.

A single-industry town in Kazakhstan is therefore more than a settlement built around a plant. It is part of an inherited economic geography that still lives on in settlement patterns, roads, professional skills, and municipal obligations. State policy is trying to adapt this legacy to an economy in which enterprises choose their own suppliers and markets, people can leave, and maintaining the city is no longer automatically built into the cost of production.

The scale of the problem cannot be considered peripheral. According to the Government, single-industry towns account for about 40% of the country’s industrial output. Their specialization supports exports, the energy sector, and major production chains. The same concentration that creates territorial risk provides the national economy with a significant share of output. Kazakhstan must simultaneously preserve strong industrial cores and reduce the dependence of the cities around them.

The Soviet model gave single-industry towns a clear specialization. Rudny mined and beneficiated iron ore, Temirtau produced steel, Balkhash — copper, Ekibastuz supplied coal to power plants, and Arkalyk sent bauxite to Pavlodar. Around the core production, repair, transport, construction, housing, schools, and healthcare emerged. The enterprise and the city formed a single socio-industrial complex.

The market transition divided this arrangement. Production assets passed to companies, while a significant share of housing and social facilities went to local authorities. The company was responsible for business competitiveness, while the city was responsible for the networks and services that had been created for the former population and the former scale of production. Where the enterprise survived, it retained enormous power over the labor market. Where it contracted, the municipality was left with a weak tax base and costly infrastructure.

Distance amplifies dependence. In a dense urban system, a worker can change factories without changing residence, and a supplier can find a nearby customer. For a remote city, the closure of an enterprise often means losing the entire local market. Relocation is expensive, housing is hard to sell, and a new company takes into account not only the production facility but also logistics, energy, water, personnel, and the quality of the urban environment.

This is how Kazakhstan’s distinctive feature takes shape: economic specialization is combined with spatial isolation. In the European industrial belt, a neighboring university, city, or labor market may be an hour’s drive away. Between Kazakhstan’s centers lie hundreds of kilometers. Here, roads and railways become part of the economic model, while schools, hospitals, and housing become a condition for attracting specialists, rather than an external social add-on to the project.

For residents, single-industry dependence means a narrow set of choices. One company sets wage levels and occupational requirements, and losing a job often means the entire family has to move. For an entrepreneur, it means one major customer and a small consumer market. For the local administration, it means a direct link between the performance of the enterprise, budget revenues, and demand for utility services.

These three dependencies may diverge. Production grows, but automation limits employment. Workers’ wages support trade, yet suppliers are registered and pay taxes elsewhere. The company finances individual social projects, while worn-out utility networks remain on the city’s balance sheet. Therefore, a ton of output or the amount of investment still does not describe the territory’s real situation.

An operating anchor enterprise provides the city with skilled jobs, tax revenues, orders, and infrastructure. At the same time, it preserves dependence: investment, employment, and the incomes of local businesses are still determined by the condition of a single company and a single industry.

This dependence can be reduced if the enterprise’s resources begin to work beyond its production footprint. Contractors develop new products, repair and engineering companies find customers in other industries, and the skills acquired by workers are used by different employers. This is what diversification means for a city with an operating enterprise.

Ekibastuz shows why simply increasing the number of companies is not enough. Mines, power plants, carriers and repair organizations belong to different legal entities, but depend on a single coal-and-energy chain. A change in demand for coal or in the operating regime of power plants will affect them all at once. In such a system, output growth can increase the city’s revenues while preserving the same risk.

Resilience will emerge when part of the accumulated expertise finds other markets: repair enterprises, engineering services, and equipment manufacturers can work with customers beyond coal-based power generation. If the anchor enterprise has disappeared, the city faces a different task — to build a new economy from the sites, infrastructure, and workforce that remain. This is the path Saran is following.

Saran presents a different model. After the decline of the rubber products plant, the city inherited an idle industrial site, utility networks, and a residential district. For a long time, these assets were a burden, and then they became the basis of an industrial zone. The site now hosts bus, tire, and household appliance production, as well as other manufacturing industries.

According to the Government, in 2019–2024 Saran’s industrial output increased 5.6-fold, the share of manufacturing reached 92%, tax revenues tripled, and more than two thousand jobs were created. The case shows how the state can reduce the investor’s entry costs: prepare land and utilities, provide financing, training, and initial demand.

The real test begins after launch. The plants produce different goods, but they may depend on the same package of incentives, imported components, and public procurement. How deep the transition goes depends on whether local suppliers and engineering services emerge, whether there is competition for workers, and whether enterprises can withstand a change in the market cycle. Saran will become a fully fledged new industrial system if the links between projects prove stronger than the initial support package.

Arkalyk shows the weakness of a formal criterion. The Torgai Bauxite Mining Department shut down after the accessible raw material base was exhausted, and the city no longer met the definition of a single-industry town. The dependence did not disappear, however: it turned into the absence of the former employer, contract work, and an industrial future.

For such a city, it is not enough to offer yet another site for a plant. It is necessary to answer which territory it serves, which markets it can enter, and what population size the new economy can sustain. The current plan combines Arkalyk with the Amangeldy and Zhangeldy districts. The scale of planning itself points to a new function — a center for agricultural and transport development in the Torgai region.

In a resource city, dependence is also measured by expectations. High birth rates and population inflows expand the labor supply faster than the capital-intensive oil industry creates permanent jobs. Young residents associate the right to employment with the presence of large companies, while companies face pressure that goes far beyond their production needs.

This gives rise to a special social contract: the enterprise is perceived simultaneously as an employer, a provider of public goods, and a mechanism for distributing resource rents. New jobs matter, but employment alone cannot solve the problem. Education, mobility, competitive small business, and clear rules defining the responsibilities of the state and companies are needed. Otherwise, expanding the workforce merely postpones the next gap between demographics and the economy.

Zhanaozen shows that single-industry dependence can persist even when the population is growing and the main resource remains valuable. This distinguishes it from shrinking mining towns. Here, opportunities need to expand faster than expectations of the oil industry grow: vocational training should be linked to real markets, businesses outside one company’s contracting chain should be supported, and voluntary labor mobility should be made easier.

The 2012 program was an acknowledgment that the fate of the enterprise and the fate of the city must be considered together. It classified cities by economic potential and combined anchor projects, support for small business, infrastructure, and assistance with resettlement. For cities with limited prospects, managed adaptation was allowed; for stronger ones, the search for new production facilities.

The approach addressed the tasks of a period when it was necessary to stabilize employment and utilities. Its limitation became apparent later: the package of projects often started with the available instruments of state support, rather than with the city’s role in economic geography. A plant can be financed, but a market for its products, suppliers, and human capital cannot be created by a single regulation.

The Regional Development Concept for 2025–2030 is moving toward a more differentiated approach. Cities are assessed by a broad set of indicators and by the stage of economic transformation. Industrial zones, concessional financing, offtake contracts, workforce training, and projects by major companies should combine into an individual development path for each territory.

This logic is closer to the global practice of place-based policy — a policy grounded in the opportunities of a specific place. However, its outcome depends on the transparency of the assessment. If it is not clear which risk is considered the main one and according to which indicators a city moves from one group to another, the list once again begins to substitute for analysis.

A place-based approach does not mean that every city must grow. For some territories, a reasonable goal will be to preserve the industrial core and prepare for a future transition; for others, a new specialization; for still others, a compact city with quality services and greater population mobility. The political challenge is to distinguish these trajectories openly, rather than promise every territory an identical return to its former scale.

Kazakhstan has powerful launch instruments at its disposal: budget-funded infrastructure, concessional lending, special zones, and procurement by large companies. They help overcome the high cost of the first step. The next task is less visible — to connect enterprises with the local labor market and suppliers. Without this, the plant produces output for the national economy, while the city gets only a limited number of vacancies and the same dependence on external decisions.

For each project, therefore, two balances are important. The first shows what share of wages, procurement, and taxes remains in the city. The second shows how many new opportunities exist outside the project itself. The more independent employers use shared infrastructure and competencies, the more resilient the territory becomes. This analysis shifts the discussion from the number of facilities opened to the quality of economic linkages.

Kazakhstan’s single-industry towns require at least four strategic approaches. In cities with a strong enterprise, the industrial chain needs to be deepened and an independent supplier base developed. On old industrial sites, land and utilities should be brought back into use quickly, as in Saran. After the enterprise disappears, the task is to find a regional service function or realistically adapt the city to a smaller scale. In growing resource cities, industry must be aligned with demographics and social mobility.

Therefore, the reduction of the list from 27 to 19 in itself says nothing about overcoming dependence. A city may leave the category because of development, a change in criteria, or the disappearance of its anchor enterprise. The substantive result is seen elsewhere: residents have a choice of jobs, enterprises sell into different markets, local firms receive orders, the budget can withstand an industry downturn, and infrastructure matches the actual population.

Kazakhstan’s distinctive feature lies in the scale of its inherited geography. The country simultaneously retains industrial centers of national importance and cities built for functions that no longer exist. A common policy can provide financial instruments; a viable role has to be found separately for each territory. The next publication in the series is devoted to Arkalyk — a city where the state is trying to restore an entire regional hub after the loss of its oblast functions and the closure of the mine.