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Kazakhstan’s oil boom, diversification strategies, and the service sector

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  • Zauresh Atakhanova

    (Nazarbayev University)

Abstract

Economic diversification and addressing challenges of non-oil producers are a common policy goal in many resource-exporting countries. This study’s contribution is in drawing policy makers’ attention to intermediate services, i.e., services used by firms together with other inputs in their production process. These services are increasingly important for enhancing manufacturing exports and productivity, as well as earning direct export revenues. Yet, there is limited research on how the intermediate service market performs in countries with large extractive industries. To understand complex dynamics between the resource and service sectors, we rely on the evidence from Kazakhstan, a large petroleum producer. Using panel data analysis, we find that, due to the very high service intensity of petroleum production, rising petroleum output leads to higher intermediate service prices and lower intermediate service output purchased by non-oil producers. To mitigate the oil boom’s crowding out of non-oil producers from the service market, we recommend service sector diversification policies.

Suggested Citation

  • Zauresh Atakhanova, 2021. "Kazakhstan’s oil boom, diversification strategies, and the service sector," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 34(3), pages 399-409, October.
  • Handle: RePEc:spr:minecn:v:34:y:2021:i:3:d:10.1007_s13563-021-00275-2
    DOI: 10.1007/s13563-021-00275-2
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    More about this item

    Keywords

    Diversification; Dutch disease; Intermediate services; Service sector reforms;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • L8 - Industrial Organization - - Industry Studies: Services
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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