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Overcoming the Curse of Hydrocarbon: Goals and Governance in the Oil Funds of Kazakhstan and Azerbaijan

Author

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  • Yelena Kalyuzhnova

    (The Centre for Euro-Asian Studies, The University of Reading, Whiteknights, PO Box 218, Reading, RG6 6AA, UK.)

Abstract

This paper discusses the contribution that oil funds can make to the policy challenges facing resource-rich countries. To set the stage, it reviews the potential role of such funds in the broader context of macroeconomic and energy policies – taking into account uncertainty about oil prices, the impact of institutional costs, and problems of organisational design. The paper then highlights the critical role of governance issues in three respects: defining transparently the goals of each fund; communicating these goals to build a constituency of public support; and ensuring the efficient and transparent management of the fund on an ongoing basis. Two recent cases in the Caspian Sea region are then discussed: Azerbaijan and Kazakhstan. In both instances, the paper highlights issues of coordination and efficiency in the investment policies of the funds. While there are attempts to monitor their transparency through public awareness and websites, the author believes that this in itself is no substitute for a comprehensive governance strategy. Moreover, improved transparency can help inform the debate about strategic issues concerning the goals for such funds, and their contribution to the country's development strategy. Comparative Economic Studies (2006) 48, 583–613. doi:10.1057/palgrave.ces.8100160

Suggested Citation

  • Yelena Kalyuzhnova, 2006. "Overcoming the Curse of Hydrocarbon: Goals and Governance in the Oil Funds of Kazakhstan and Azerbaijan," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 48(4), pages 583-613, December.
    • Handle: RePEc:pal:compes:v:48:y:2006:i:4:p:583-613
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    Citations

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    Cited by:

    1. Taguchi, Hiroyuki & Ganbayar, Javkhlan, 2022. "An econometric study on the classification and effectiveness of natural resource funds," MPRA Paper 114392, University Library of Munich, Germany.
    2. Pomfret, Richard, 2012. "Resource management and transition in Central Asia, Azerbaijan and Mongolia," Journal of Asian Economics, Elsevier, vol. 23(2), pages 146-156.
    3. Richard Pomfret, 2011. "Exploiting Energy and Mineral Resources in Central Asia, Azerbaijan and Mongolia," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 53(1), pages 5-33, March.
    4. Hiroyuki Taguchi & Javkhlan Ganbayar, 2022. "Natural Resource Funds: Their Objectives and Effectiveness," Sustainability, MDPI, vol. 14(17), pages 1-20, September.
    5. Tsani, Stella, 2013. "Natural resources, governance and institutional quality: The role of resource funds," Resources Policy, Elsevier, vol. 38(2), pages 181-195.
    6. Stela Cani, 2009. "Resource Abundance, Mineral Funds and Institutional Quality," Economics Discussion Papers em-dp2009-04, Department of Economics, University of Reading.
    7. Yelena, Kalyuzhnova, 2011. "The National Fund of the Republic of Kazakhstan (NFRK): From accumulation to stress-test to global future," Energy Policy, Elsevier, vol. 39(10), pages 6650-6657, October.
    8. Lücke, Matthias, 2010. "Stabilization and savings funds to manage natural resource revenues: Kazakhstan and Azerbaijan vs. Norway," Kiel Working Papers 1652, Kiel Institute for the World Economy (IfW Kiel).
    9. Kalyuzhnova, Yelena & Nygaard, Christian, 2008. "State governance evolution in resource-rich transition economies: An application to Russia and Kazakhstan," Energy Policy, Elsevier, vol. 36(6), pages 1829-1842, June.
    10. Leonardo G. Romeo & Mohamed El Mensi, 2011. "The Difficult Road to Local Autonomy in Yemen: Decentralization Reforms between Political Rationale and Bureaucratic Resistances in a Multi-party Democracy of the Arabian Peninsula," Chapters, in: Jorge Martinez-Vazquez & François Vaillancourt (ed.), Decentralization in Developing Countries, chapter 15, Edward Elgar Publishing.
    11. Manuela Troschke & Horst Ufer, 2006. "Fiskalische Dezentralisierung und regionale Disparitäten in Kasachstan," Working Papers 262, Leibniz Institut für Ost- und Südosteuropaforschung (Institute for East and Southeast European Studies).
    12. David Kemme, 2012. "Soverign Wealth Fund Issues and the National Fund(s) of Kazakhstan," William Davidson Institute Working Papers Series wp1036, William Davidson Institute at the University of Michigan.
    13. Sovacool, Benjamin K. & Andrews, Nathan, 2015. "Does transparency matter? Evaluating the governance impacts of the Extractive Industries Transparency Initiative (EITI) in Azerbaijan and Liberia," Resources Policy, Elsevier, vol. 45(C), pages 183-192.
    14. Tsani, Stella, 2015. "On the relationship between resource funds, governance and institutions: Evidence from quantile regression analysis," Resources Policy, Elsevier, vol. 44(C), pages 94-111.
    15. Jorge Martinez-Vazquez & François Vaillancourt (ed.), 2011. "Decentralization in Developing Countries," Books, Edward Elgar Publishing, number 14175.

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