Energy wealth and tax reform in Russia and Kazakhstan (original) (raw)
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Energy policy, 2008
Following a decade of transition in the Former Soviet Union (FSU), governance of the oil and gas sectors has evolved to economic nationalism. In the newly independent states this has manifested itself through greater (direct) state ownership or participation in oil and gas production, at the expense of both domestic (in the case of Russia) and international oil companies, as well as legislative developments that increase the flow of oil and gas value to the state. Here we analyse some of the dynamics giving rise to economic nationalism within a model of a state capacity and the ability to implement policy and extract value. Our analysis is based on the institutional and economic functioning of the oil and gas sector. We analyse a vector of institutions and examine Production Sharing Agreements and National Oil Companies.
Why does the resource curse affect some mineral-rich states but not all? While its likelihood to paradoxically produce an array of negative outcomes such as unbalanced economic growth, authoritarianism and impoverished populations in developing states is well-documented, it remains unclear why it only appears to befall some, but not all states. Two otherwise similar mineral-rich, newly independent Central Asian states Turkmenistan and Kazakhstan present an opportunity to study this puzzle as they have developed in diverging trajectories along the resource curse path after the disintegration of the Soviet Union. While Turkmenistan is notorious for its classical rentier state with the worst development/poverty indicators in the region, Kazakhstan improved its business environment, fiscal sector and Human Development Index indicators. In answering this puzzle the paper develops the rentier state model that lies at the heart of the resource curse mechanisms and outcomes, followed by an integrative case study based on this model. The main findings suggest that the difficulty of extraction factor characteristic of Kazakh oil fields has led the government to abandon its command economy (in contrast to Turkmenistan) and rely heavily on foreign investment and technology. Largescale foreign privatization of the petroleum sector has led to a series of legislative, fiscal and expenditure reforms that continue to hinder the formation of a classical rentier state. The thesis also concludes that private ownership structureand its observed positive impactmight help institutionalize reforms and better manage resource wealth in other mineral-rich developing states.
ENERGY SECURITY OF A RENTIER STATE: A CASE STUDY OF KAZAKHSTAN
Central Asia Journal Peshawar University, 2020
As modern world run on oil, the unprecedented rise in oil consumption during last century has generated daunting energy security challenges for the oil producing states. It is simultaneously important for energy import dependent nations and exporting nations. However, exporting nations face some captious challenges. In former Soviet Republics, Kazakhstan is one of the richest oil producing state whose over reliance on rent generated by oil exports presents daunting energy security challenges for the states at internal and external levels. On the one hand, Kazakhstan's economic development owes a great deal to the oil rent. On the other hand, it is also responsible for Kazakhstan's struggle in establishing a strong democratic political system. In addition, generating rent income face severe security challenges at external level. The involvement of external powers in Kazakh oil sector, pipeline infrastructure and threats posed by non-state actors, make the whole scenario a great challenge for Kazakhstan. The study examines the challenges rentierism has generated for Kazakhstan at internal and external levels.
RUSSIA'S RESOURCE CURSE: INTERNAL AND EXTERNAL POLITICAL AND ECONOMIC IMPACTS
This paper examines the resource curse phenomenon in the Russian economy under the prism of economic nationalism of international political economy (IPE). This cycle of 'resource curse,' results in a paradox by which countries endowed with abundant resources experience lower GDP growth rates in relation to other non-resource rich economies. The implications of this phenomenon, on a country that, in the post Soviet era, has defined itself as an 'energy superpower,' are particularly important for the European Union, which continues to heavily rely on Russia for its energy needs. The period under study is from 2001 to 2014. The 2000 election of Vladimir Putin as President of the Russian Federation created political and macroeconomic stability. This solid macroeconomic environment, however, was not due to viable long-term economic policy. It was mainly a result of a prolonged period of high oil prices that coincide with the period under examination. The paper begins with an analysis of the resource curse and Dutch disease phenomena under the prism of economic nationalism of IPE. Furthermore, the macroeconomic environment of Russia during the period under study is also examined. Moreover, the consequences of the resource curse and Dutch disease for the prospects of the Russian economy are discussed. Stemming from its heavy reliance on revenues from oil and gas exports, the paper outlines the possible macroeconomic consequences engendered by the Russia's resource curse if the productive model remains the same in the future.
How Effective are Oil Funds? Managing Resource Windfalls in Azerbaijan and Kazakhstan
2007
Norio Usui writes that the recent surge in global commodity prices has brought large windfall revenues to resource-rich economies in Asia. Booming economies have, however, faced challenges of macroeconomic stabilization and intergenerational income distribution, and sought a solution to setting up a separate fund outside the budget. This brief assesses the experiences of Azerbaijan and Kazakhstan in their oil revenue management, and concludes that if there is insufficient control of expenditure or deficits, setting up an oil fund by itself does not guarantee either a prudent stance on overall fiscal management or commitment to savings for future generations.
A meaningful understanding of the political economy of energy and development in contemporary Eastern Europe must be situated within the context of the end of the Cold War and the impact of the transition from Soviet to Russian oil and gas export policy. The discontinuous development of formerly communist countries in the post soviet era was the result of a number of endogenous and exogenous factors, as many countries experienced structural reforms, reshaping political, economic and social institutions all within a rapidly changing commercial and security environment. The elimination of favorable Soviet energy subsidies to members of the Council for Mutual Economic Assistance (CMEA) in 1984 was an external shift that I will argue had a significant bearing on the long term economic and political trajectory of Eastern Europe. The marketization of energy introduced price uncertainty into what had been a stable trade relationship between the USSR and the Socialist Bloc states. Additionally, with the economic deterioration of the USSR in 1989, what had once been a reliable flow of oil and gas collapsed and was eventually rerouted in favor of Western Europe and China. The elimination of first price, and second supply guarantees to CMEA members contributed to stagnation in the rate of imports and decline in energy consumption, resulting in limited gains in productivity that persists in East Europe today. In this paper I employ panel data from politically and geographically continuous European states over the last 60 years, matching CMEA and non-CMEA members by energy profile propensity scores in order to identify states with similar pre-treatment conditions. This allows me to effectively demonstrate the variation in the rate of energy use pre and post 1989, as well as variation in the rate of net energy imports pre and post subsidy eliminations in 1984 across treated and non treated states. I will then show how this discontinuity in energy imports and consumption would come to impact long term development and energy policy of formerly soviet aligned states, illustrating the effects on rates of domestic productivity, consumption, and energy dependence.