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Impact of Oil Revenue Spending on Income Distribution: the Case of Azerbaijan

Author

Listed:
  • Hamza Khalilov

    (Azerbaijan University of Architecture and Construction, Faculty of Economics, Baku, Azerbaijan)

  • Ramil Huseyn

    (Azerbaijan State Economic University (UNEC), Baku, Azerbaijan)

Abstract

This paper examines the impact of the oil factor on income distribution in a resource-rich country, Azerbaijan. Since the early 2000s, the rapid increase in oil revenuesh as been used for the economic and social development in the country. The increased revenues from oil sales has led to a sharp increase in the share of the top 10% of the population in total income, the stabilization of the share of the lowest 10%, and a significant decline in the share of the middle layer. The widespread use of oil revenues has played a leading role in the formation of new structural features in social stratification. In addition to the sharp decline in extreme poverty in the country, the layer with a higher income has emerged. At the same time, increasing oil revenues has not given a strong impetus to the formation of a prosperous middle layer. This paper also demonstrates that the solution of the income inequality problem is related to improving the quality of institutions, enhancement strategies for the use of oil revenues in the short and long terms, as well as ensuring the consistent implementation of an active diversification policy.

Suggested Citation

  • Hamza Khalilov & Ramil Huseyn, 2021. "Impact of Oil Revenue Spending on Income Distribution: the Case of Azerbaijan," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 4, pages 622-639, December.
    • Handle: RePEc:nwe:eajour:y:2021:i:4:p:622-639
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    More about this item

    Keywords

    Income Inequality; oil factor; oil revenues; population incomes; Gini coefficient; social stratification;
    All these keywords.

    JEL classification:

    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
    • P24 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation
    • P36 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers

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