Esanov and Kuralbayeva - Ricardian Curse of the Resource Boom - The case of Kazakhstan

Esanov, A., and Kuralbayeva, K., Ricardian Curse of the Resource Boom: The case of Kazakhstan, 2000-2008, Paper No 43, OXCARRE Research 

The authors examine the resource management decisions made in Kazakhstan between 2000 and 2008. They note the macroeconomic developments within the period, allocation of resource revenues and the fiscal policies put in place to enable the government derive optimal and increasing share of resource rents.

With regards to managing its oil revenues, the authors examine the National oil fund of Kazakhstan and its asset management strategies and find that the fund has been properly managed; and that the government adopted prudent and cautious spending policies which led to the stable macroeconomic conditions in the country.

The authors argue that notwithstanding the government’s fiscal prudence leading to sustained economic growth, the explosive consumption boom in the private sector due to access to foreign capital and unrestrained over-borrowing jeopardized the overall growth potentials of the country. The authors describe this scenario as the Ricardian curse of the resource boom.

With the global financial crises, the authors note that the government has made and is making fiscal and economic plans to mitigate the effect of the financial meltdown and future economic recovery. In this regard, the authors note that since Kazakhstan is a capital scarce country, it should use its resource revenues to build on capital assets within the country rather than acquire foreign financial assets which return on investment may be minimal.

The authors conclude that effectiveness of oil revenue management may be hampered without adequate regulatory control of the consumption/investment balance of private sectors.

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