ABSTRACT
This chapter analyses the reform progress made in the energy-rich states of the Commonwealth of Independent States (CIS), Azerbaijan, Kazakhstan, Turkmenistan and Uzbekistan (AKTU for short) and contrasts their development to that in the resource-poor countries at the CIS periphery. The main argument of the chapter is that far from being a blessing that would have allowed energy-rich countries to cushion the impact of reforms and thus make faster progress, energy rents have often been wasted or appropriated by the ruling elites. Progress in key structural reforms has in some cases lagged even behind other CIS countries and significant policy challenges need to be addressed if natural resource wealth is not to turn into a curse for the region.
This chapter analyses reform progress during the first decade of transition in the energy-rich CIS states of Central Asia and the Caucasus, Azerbaijan, Kazakhstan, Turkmenistan and Uzbekistan (AKTU for short)2 and contrasts their development to that in the resource-poor countries in that region. While agricultural land, minerals and hydrocarbon reserves are all part of a country’s resource endowment, we focus on the availability of energy resources as the key differentiating factor in explaining transition paths in the CIS. This is because energy resources have tended to generate far larger resource rents than minerals or agriculture. Resource rents are here understood to be pure profits generated by the extraction of natural resources, once all factors of production have been remunerated at their opportunity cost and the costs of transport to market has been subtracted.
