Kazakhstan: Long-Term Economic Growth and the Role of the Oil Sector
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This study combines a narrative and modelling framework to analyse the development of Kazakhstan’s oil sector since its takeoff following separation from the USSR. As in the case of other emerging or transitional countries with large natural resource endowments, a key question is whether the exploitation of the natural resource is a benefit to longer term economic development: is it a curse, a blessing – or neither? Narrative evidence suggests that the establishment of good governance, in terms of institutions and policies, provides a background to sound long-term development, especially if combined with the development of sectors outside the natural resource sector, for example diversification into manufacturing and services, often through attracting FDI. The narrative is supported by econometric modelling of the relationship between domestic output, overseas output and exports of oil, which finds in favour of a sustained positive effect of oil exports on GDP. The model then provides a basis for projection of the growth in GDP given a consensus view of likely developments in the oil price.
KeywordsKazakhstan oil exports economic growth steady state scenario projections
JEL ClassificationsP28 Q43 Q48
The authors are grateful to Maxim Romanov for his excellent research assistance, to Azat Aituar and Dina Azhgaliyeva for data assistance, and to Tom Fletcher of the Department of Energy and Climate Change (DECC). They are also grateful to a referee for his encouragement and constructive comments on previous versions of this article.
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