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Ricardian Curse of the Resource Boom: the Case of Kazakhstan 2000-2008

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  • Akram Esanov
  • Karlygash Kuralbayeva

Abstract

This paper examines how Kazakhstan handled key decisions in resource management during the 2000-2008 period and whether resource revenues were harnessed for sustained growth. We found that the hydrocarbon sector served as an engine of strong economic growth in the country by boosting domestic demand and propelling growth in such non-tradable sectors as construction and financial sector. In addition, our analysis suggests that prudent macroeconomic policies had been pursued by the government with more than two-thirds of oil revenues being saved in the Oil Fund. Notwithstanding sound macroeconomic policies, the private sector remained under-regulated and took excessive risks by over-borrowing abroad, which led to consumption boom. The government lacked policies aimed at discouraging excessive risk taking behavior of the private sector, which greatly jeopardized the sustainability of Kazakhstan’s growth potential and the government’s prudence. We refer to this phenomenon as a Ricardian curse of the resource windfall.

Suggested Citation

  • Akram Esanov & Karlygash Kuralbayeva, 2010. "Ricardian Curse of the Resource Boom: the Case of Kazakhstan 2000-2008," OxCarre Working Papers 043, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    • Handle: RePEc:oxf:oxcrwp:043
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    References listed on IDEAS

    as
    1. Karlygash Kuralbayeva & David Vines, 2008. "Shocks to Terms of Trade and Risk-premium in an Intertemporal Model: The Dutch Disease and a Dutch Party," Open Economies Review, Springer, vol. 19(3), pages 277-303, July.
    2. Frederick van der Ploeg & Anthony J. Venables, 2011. "Harnessing Windfall Revenues: Optimal Policies for Resource‐Rich Developing Economies," Economic Journal, Royal Economic Society, vol. 121(551), pages 1-30, March.
    3. Kaiser, Mark J. & Pulsipher, Allan G., 2007. "A review of the oil and gas sector in Kazakhstan," Energy Policy, Elsevier, vol. 35(2), pages 1300-1314, February.
    4. Boadway, Robin & Keen, Michael, 2009. "Theoretical Perspectives on Resource Tax Design," Queen's Economics Department Working Papers 273692, Queen's University - Department of Economics.
    5. Boris Najman & Richard Pomfret & Gael Raballand, 2007. "The Economics and Politics of Oil in the Caspian Basin," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00266724, HAL.
    6. Anthony Venables & Paul Collier, 2008. "Managing Resource Revenues: lessons for low income countries," OxCarre Working Papers 012, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    7. Robin Boadway & Michael Keen, 2009. "Theoretical Perspectives On Resource Tax Design," Working Paper 1206, Economics Department, Queen's University.
    8. Gaël Raballand & Ferhat Esen, 2007. "Economics and politics of cross-border oil pipelines—the case of the Caspian basin," Asia Europe Journal, Springer, vol. 5(1), pages 133-146, March.
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    Cited by:

    1. Girard, Victoire & Kudebayeva, Alma & Toews, Gerhard, 2020. "Inflated Expectations and Commodity Prices: Evidence from Kazakhstan," GLO Discussion Paper Series 469, Global Labor Organization (GLO), revised 2020.
    2. Gerhard Toews, 2013. "Inflated Expectations and Natural Resource Booms: Evidence from Kazakhstan," OxCarre Working Papers 109, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    3. International Monetary Fund, 2013. "Republic of Kazakhstan: Selected Issues," IMF Staff Country Reports 2013/291, International Monetary Fund.

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