Dervis. K., Melo, J., Robinson, S., 1982, General Equilibrium Models for Development Policy, Cambridge University Press, New York.
Dixon, P., Parmenter, B., Powell, A., and Wilcoxen, P., 1992, Notes and Problems in Applied General Equilibrium Economics, North-Holland.
Easterly, W., and Fischer, S., 1994, “The Soviet Economic Decline: Historical and Republican Data,” World Bank Policy Research Working Paper No. 1284.
Gupta, S., Clements, B., Fletcher, K., and Inchauste, G., 2002, “Issues in Domestic Pricing in Oil-Producing Countries,” IMF Working paper, WP/02/140.
Harrison, W. and Pearson, K., 1996, “Cómputing Solutions for Large General Equilibrium Models Using GEMPACK”, Computational Economics, Vol. 9, pp.83–127.
Krugman, Paul, 1979, “The Narrow Moving Band, The Dutch Disease and the Competitive Consequences of Mrs. Thatcher: Notes on Trade in the Presence of Dynamic Scale Economies,” Journal of Development Economics No. 27.
Robinson, S., Yunez-Naude, A., Hinojosa-Ojeda, R., Lewis, J., and Devarajan, S., 1999, “From Stylized to Applied models: Building multisector CGE models for policy analysis,” The North American Journal of Economics and Finance No. 10.
Sachs, J., and Warner, A., 1995, “Economic Reform and the process of global integration,” Brookings Papers on Economic Activity, Issue 1, Washington.
Statistics Agency of the Republic of Kazakhstan, 2002, Fixed Assets and Non-tangible Assets of the Republic of Kazakhstan: Statistical handbook, Almaty.
Prepared by Paulo Medas.
1996 has been identified, previously, as the start of the recovery after the disintegration of the Soviet Union. According to De Broeck and Kostial (1998) the economy shrank at an average of about 10 percent a year between 1991–95. However, others like Aslund, Boone and Johnson (2001) argue that the large decline in the official economy was partially offset by an increase of the unofficial economy.
There is substantial evidence that natural resource-rich countries tend to have lower long-term growth. However, the reasons for such a “curse” are not fully understood. Sachs and Warner (2001), and Auty (2001), discuss some of the potential reasons. These include “Dutch disease” effects, dominance of rent-seeking activities over productive ones, import-substitution strategies, and lower investment in human capital, among others.
Krugman (1979) presents some arguments why temporary losses of competitiveness, due to an appreciation of the exchange rate, can have long-term effects.
Figure II-1 shows the results of an analysis of sources of growth, based on a growth accounting exercise. The analysis uses the standard assumption that output follows a Cobb-Douglas production function, with employment and capital as factors of production, such that:
Δy=Δa + αΔ1+(1−α)Δk,
where y, a, 1, and k stand for GDP, total factor productivity, employment, and capital respectively; A represents percentage change, α is assumed to be 0.55, an estimate based on the labor share in total income.
In practice, changes in total factor productivity (TFP) reflect not only changes in technology, but also improvements in efficiency due to diverse factors, such as improvements in infrastructures or reforms in general. Havrylyshyn (2001) presents a survey of several studies on transition economies, which show that the initial recovery was generally based on efficiency gains.
These incentives to agriculture production and expansion of land use, consist of several instruments, from loans and subsidies, to schemes to sustain high prices in agriculture.
The analysis of the labor market is also complicated by changes in methodology in the last years. However, the trend seems to be for a recovery in employment in the last 3 years.
The estimates for capital stock changes are based on the data for the capital stock in 1994 and amortization until 2000 from the Statistics Agency of the Republic of Kazakhstan (2002). The data on investment are from the National Accounts and surveys of enterprises. The computation of sectoral total factor productivity assumes a Cobb-Douglas production function with labor and capital as factors of production. Land was also included as a factor of production for agriculture.
The estimates are based on data from the National Statistics Agency of Kazakhstan. The input-output tables for the period 1998–2001, that have been developed by the NSA were an important source. The estimates do not capture the total multiplier impact associated with oil production, but represent the main effects.
Mainly from railway to pipelines.
The DMR model is a multisector general equilibrium model, and has been applied to several countries and is used by the World Bank. For a more detail discussion on the model see Dixon etal (1992).
See Box II-1, which describes the main features of the model. For further information on the model and data used contact firstname.lastname@example.org.
Domestic prices are not allowed to increase by more than half of the world price increase. This reflects the restrictions in the domestic market, which keep domestic prices below market prices, using different mechanisms such as export restrictions and subsidies. Such policies are common to oil producer countries, including Kazakhstan. For a more detailed discussion on these issues see Gupta, et al (2002).
There is also a small increase in exports of oil. Changes in the oil price have a limited impact on oil production because the oil industry in Kazakhstan has only limited capacity to increase production and exports in the short run, and oil prices currently exceed, in general, production costs. See also the earlier chapter on the petroleum sector. Any production increase will come mainly from marginal producers that have higher production and transportation costs.
The Kazakhstani government started to transfer oil revenues to the oil fund in 2001. In 2001–02, the rule has been that 90 percent of oil revenues up to a price of $19/bbl go to the budget, while revenues from higher prices go fully to the oil fund.
The impact of changes in the oil price on GDP is limited partly because the oil industry is still emerging and has limited capability to increase production and exports in the short run. The oil fund and payments to foreign shareholders of the oil companies also contribute to dampening the impact of changes in the oil price.
The model does not capture the potential for large long-run gains in productivity in transition economies, such as Kazakhstan.
The exact impact on consumption and investment depends on the specifications of the model.
Sachs and Warner (1995) present an extensive analysis of the impact of reforms linked with international trade, particularly trade policies, on economic growth for several countries.
Which are the remains of the state enterprises.
After independence, there was a collapse on the use of arable land. Since 1999, there has been an increase in planted areas close to the levels that are though to be economically viable.
The change in coverage of agricultural employment statistics makes an accurate measurement of changes in labor input difficult.
The sector also has a large proportion of part-time and two-jobs workers, who have their household plots for self-consumption or to supplement income.