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Kazakhstan, the largest of the former Soviet republics in territory, excluding Russia, possesses enormous fossil fuel reserves and plentiful supplies of other minerals and metals. It also has a large agricultural sector featuring livestock and grain. Kazakhstan`s industrial sector rests on the extraction and processing of these natural resources and also on a growing machine-building sector specializing in construction equipment, tractors, agricultural machinery, and some defense items.

The breakup of the USSR in December 1991 and the collapse in demand for Kazakhstan`s traditional heavy industry products resulted in a short-term contraction of the economy, with the steepest annual decline occurring in 1994. In 1995-97, the pace of the government program of economic reform and privatization quickened, resulting in a substantial shifting of assets into the private sector. Kazakhstan enjoyed double-digit growth in 2000-01 - 9% or more per year in 2002-05 - thanks largely to its booming energy sector, but also to economic reform, good harvests, and foreign investment.

The opening of the Caspian Consortium pipeline in 2001, from western Kazakhstan`s Tengiz oilfield to the Black Sea, substantially raised export capacity. Kazakhstan also has begun work on an ambitious cooperative construction effort with China to build an oil pipeline that will extend from the country`s Caspian coast eastward to the Chinese border. The country has embarked upon an industrial policy designed to diversify the economy away from overdependence on the oil sector by developing light industry..