Natural resource funds as mechanisms for avoiding the resource curse : a comparative study of Kazakhstan, Azerbaijan and Norway

Masteroppgave i økonomi og administrasjon – Universitetet i Agder 2014Studies show that countries blessed with an abundance of natural resources such as oil tend to have less economic growth and a less fortunate development than countries with fewer natural resources. This master thesis is motivated by the fact that there are relatively few studies conducted on a natural resource funds‟ roles in addressing the “resource curse” and its impact upon the society. The thesis will use a comparative study of Kazakhstan, Azerbaijan and Norway to investigate the use of resource funds related to resource curse avoidance. A special focus is set on the funds‟ budget control and transparency. Variables used to assess the resource curse exposure are oil dependence, per capita GDP growth, and control of corruption. We suggest that funds with a strong commitment to initiatives that aim to enhance transparency contribute to avoiding the resource curse in the long run, and that an increased ability to save and smooth expenditure will also help in avoiding the resource curse. Recommendations are to implement rule-based operations of the funds and stricter policies for increasing transparency and for reducing expenditure volatility