Legal Protection for Foreign Investors in Kazakhstan

Abstract

This paper aims to analyze the legal protections in place in Kazakhstan for foreign investors. The analysis is based on the index described in the article by Shleifer and Vishny, 1997; La Porta, Lopez-de-Silanes, Shleifer, and Vishny, 1997, 1998; Shleifer and Wolfenzon, 2002 (La Porta table). In the La Porta article, the authors created an index to measure legal protection for investors via the use of complex statistics. The study, through its metrics, found that countries with a common-law system have better protections than countries with a civil-law system. The assessment of investor legal protection in a particular country is based on records of the following indexes: “Anti-Director Rights Index” (ADRI), creditor rights, shareholders rights, legal enforcement and ownership.Kazakhstan has a civil-law system of law. To evaluate shareholders legal protection in Kazakhstan, we collected all necessary legal data. This legal data was then converted to index measures using detailed norms of legislation. In cases when the data is not easily accessible or additional payments are needed, we used other reasonable information to ensure consistency.In order to analyze legal protection in Kazakhstan, we plan to discuss all of the La Porta table’s positions. We will prove that even though Kazakhstan has a civil system of law; the country has one of the highest scores in ADRI, creditor and shareholder rights indexes. But because of Kazakhstan’s level of corruption, the score on the legal enforcement index needs to be improved.