How are oil revenues redistributed in an oil economy? The case of Kazakhstan

The main value added of this paper is the empirical approach we use to assess the impact of the oil boom. The selected case study is Kazakhstan because an oil boom has driven Kazakhstan's economy since the discovery of large new oilfields in the late 1990's and early 2000's. We use household survey data from before and after the start of the oil boom to assess the extent to which the benefits from the oil boom were retained in the oil-producing regions, or spread evenly across the national economy, or were concentrated in metropolitan centres. Our assessment of the impact of oil boom confirms that oil revenues are not widely spread in the country, especially in rural regions (where oil is extracted). One of the two largest oil-producing regions remains, on average, the poorest region of the country. On the contrary, the two capitals of the country (Almaty, the former capital and financial centre, and Astana, the capital since 1997), home to the country's elite, have seen a major improvement of living conditions and revenues. Neither redistribution which oil companies undertake through social projects nor official redistribution through regional budgets seems to reach the poorest population in oilproducing regions, and it remains a major challenge for any government to redistribute evenly oil revenues in an oil economy. So far the main channel for redistribution has been unofficial, through the informal economy.