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Global Oil Price Shocks and Sustainability: The Case of Post-Soviet Resources-Rich Countries

Global Oil Price Shocks and Sustainability: The Case of Post-Soviet Resources-Rich Countries

Vugar Bayramov (Center for Economic and Social Development, Azerbaijan) and Nigar Islamli (Center for Economic and Social Development, Azerbaijan)
Copyright: © 2022 |Pages: 25
DOI: 10.4018/978-1-6684-5580-7.ch003
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Abstract

For countries whose economies are largely based on oil revenues, the impacts of global oil price shocks play a significant role. This research aims at investigating the impacts of the post-2014 oil price shock on the post-soviet resources-rich countries of the Caspian Basin, namely Azerbaijan, Russia, and Kazakhstan. The drop in oil prices caused the economic slowdown in all three countries. In comparison with the other two countries, Azerbaijan was able to prevent the negative impact with a social package. The post-shock social package was implemented by the Azerbaijani government in 2019, which covered more than 3 million people. This package can be considered as an “Azerbaijani model” for the stability of macroeconomic indicators during the devaluation period.
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Literature Review

This part reviews an overview of recent literature on the impacts of the global oil shock on Azerbaijan, Kazakhstan, and Russia. The impact of falling oil prices on resource-rich countries will be examined. Since the export of these countries is based on one type of product, their economic sustainability also depends on export revenues and domestic spending. In some countries, economic diversification is a force for economic stability. However, in the long run, economic diversification has a better effect. (Gelb, 2010; Kilinc-Ata, 2022)

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