Development Finance and Economic Spillovers: Study of Kazakhstan’s Industrial Support

Abstract This study examines the structural effects of Development Financial Institutions (DFIs) on Kazakhstan’s economy using an input–output (IO) multiplier framework. Despite growing public investment through DFIs, empirical evidence on their sectoral impact remains scarce in the Kazakhstani context. Addressing this gap, the research integrates manually compiled sectoral DFI support data with national I–O tables across 68 sectors for the period 2012–2023, of which 31 sectors received institutional support. The study’s originality lies in linking macroeconomic structural indicators-such as output multipliers and backward integration-with financial intervention data. The model includes investment (gross fixed capital formation), intersectoral linkages, and a DFI support dummy, with export and final demand variables excluded due to multicollinearity and stationarity concerns. The findings show that DFI-supported sectors are associated with significantly higher multipliers, suggesting that targeted support contributes to stronger structural effects. While investment demonstrates diminishing returns, backward integration remains positively correlated with economic spillovers. The practical significance of the work lies in the fact that its conclusions can be used in shaping public policy in Kazakhstan and developing DFI strategies aimed at increasing structural multipliers and the sustainability of the national economy.