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Riccardian Curse of the Resource Boom: The case of Kazakhstan 2000-2008

Listed author(s):
  • Akram Esanov
  • Karlygash Khuralbayeva

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.

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Paper provided by Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford in its series OxCarre Working Papers with number 043.

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Date of creation: 2010
Handle: RePEc:oxf:oxcrwp:043
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  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. Robin Boadway & Michael Keen, 2009. "Theoretical Perspectives on Resource Tax Design," Working Papers 1206, Queen's University, Department of Economics.
  3. 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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