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The Economic Prospects of the CIS

Sources of Long Term Growth

Edited by Gur Ofer and Richard Pomfret

This book brings together ten original studies on the transition and growth experience and the foundations for long-term growth of the newly independent states created by the dissolution of the Soviet Union.
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Chapter 11: Natural resources and economic growth in Kazakhstan

Yelena Kalyuzhnova, James Pemberton and Bulat Mukhamediyev


Yelena Kalyuzhnova, James Pemberton and Bulat Mukhamediyev The possession of rich natural capital (agricultural land, forests, fossil fuels and minerals) has the potential to play an important role in the economic performance of transition economies. There is some evidence from nontransitional economies which suggests that resource-rich economies have slower economic growth, for example because corruption and rent-seeking may be encouraged, or because there is reduced incentive to pursue soundly based macroeconomic policies (Auty, 2001; Dolinskaya, 2001). However, this question is quite debatable in the transition context. For example, Dolinskaya (2001, p. 21) argues that countries with rich resources do better in transition. Among the CIS countries, the best-endowed are Azerbaijan, Kazakhstan, Turkmenistan, Uzbekistan and, especially, Russia. Economic growth in Kazakhstan, Azerbaijan and Turkmenistan has been led by large exports of fossil fuel, namely oil and natural gas. Kyrgyzstan and Tajikistan export hydroelectricity. Pomfret (forthcoming) provides a good overview of the transition experience of all five Central Asian republics, focusing both on common features and on country-specific features. Outside Central Asia, economic growth in Poland, Armenia and Lithuania, for example, relies significantly on agricultural output. Although the existence of natural resources may be a temptation to governments to pursue bad policies, the sensible use of natural resources can generate benefits for the whole economy and contribute to a higher economic growth. However, policy has to be balanced. At the present time there is a real danger that excessive exporting of natural resources is leading to excessive dependency on...

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