Abstract

Government project offices have become a central instrument of public sector reform, yet their impact on economic performance remains insufficiently understood, particularly at the sub-national level. The analysis examines the relationship between project-based governance and regional economic outcomes in Kazakhstan using panel data for 16 regions over the period 2005–2024. A difference-in-differences framework with heterogeneous treatment intensity—operationalizing implementation intensity through the Post × Capacity Index (did_capacity) interaction—is employed, incorporating region and year fixed effects and clustered standard errors. The estimates indicate a positive and statistically significant association between the development of project offices and regional economic performance. The magnitude of the effect varies across regions and is strongly moderated by administrative capacity. Regions with higher implementation capacity experience more pronounced gains, while regions with lower capacity exhibit weaker responses. Event-study estimates support the parallel trends assumption and reveal a gradual emergence of effects over time, consistent with delayed institutional adjustment. Digitalization is positively associated with economic performance but does not produce a robust causal effect within the identification framework, suggesting that technological adoption requires complementary organisational capacity to generate measurable outcomes. The findings provide empirical evidence on the role of institutional capacity in shaping the effectiveness of governance reforms and highlight the importance of accounting for regional heterogeneity in policy design. These findings have direct implications for the design and evaluation of public sector modernisation strategies in middle-income economies.

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