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 of 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. The Caspian
Pipeline Consortium agreement to build a new pipeline from western
Kazakhstan's Tengiz oil field to the Black Sea increases prospects
for substantially larger oil exports in several years. Kazakhstan's
economy again turned downward in 1998 with a 2% decline in GDP due
to slumping oil prices and the August financial crisis in Russia.
The recovery of international oil prices in 1999, combined with a
well-timed tenge devaluation and a bumper grain harvest, pulled the
economy out of recession in 2000. Astana has embarked upon an
industrial policy designed to diversify the economy away from
overdependence on the oil sector by developing light industry.

Kenya:
Kenya is well placed to serve as an engine of growth in East
Africa, but its economy has been stagnating because of poor
management and uneven commitment to reform. In 1993, the government
of Kenya implemented a program of economic liberalization and reform
that included the removal of import licensing, price controls, and
foreign exchange controls. With the support of the World Bank, IMF,
and other donors, the reforms led to a brief turnaround in economic
performance following a period of negative growth in the early
1990s. Kenya's real GDP grew 5% in 1995 and 4% in 1996, and
inflation remained under control. Growth slowed after 1997,
averaging only 1.5% in 1997-2000. In 1997, political violence
damaged the tourist industry, and Kenya's Enhanced Structural
Adjustment Program lapsed due to the government's failure to
maintain reform or address public sector corruption. Severe drought
in 1999 and 2000 caused water and energy rationing and reduced
agricultural sector productivity. A new economic team was put in
place in 1999 to revitalize the reform effort, strengthen the civil