The Management of Hydrocarbon Wealth: National Oil Funds

Abstract

Oil revenues offer important opportunities to enhance economic development. But they are also volatile, unpredictable and ultimately exhaustible; and they can thus greatly complicate economic management. In the Caspian region, the starting assumption must be that resource endowment is potentially a ‘blessing’ that can help overcome transition disruptions. But the lesson of experience elsewhere is that fulfilling this promise — and avoiding the risk of natural resources becoming a ‘curse’ — iscrucially dependent on policies, including a commitment to enhanced policy transparency.

This chapter is based on a revised version of the paper by Y. Kalyuzhnova, ‘Overcoming the curse of hydrocarbon: goals and governance in the oil funds of Kazakhstan and Azerbaijan’, Comparative Economic Studies, Vol. 48, No. 4, December 2006; 583–613.