The Causality Relationship Between Natural Gas Consumption and Economic Growth in Caucasus and Central Asian Economies With Natural Gas Exporters

The Reserves, Production And Consumption Of Natural Gas In The Caucasus And Central Asian Countries Exporting Natural Gas

The Caucasus countries of Azerbaijan, Georgia, and Armenia and the Central Asian countries of Kazakhstan, Uzbekistan, Turkmenistan, Tajikistan, and Kyrgyzstan, are divided into two among themselves, with some countries exporting natural gas (Azerbaijan, Kazakhstan, Uzbekistan, and Turkmenistan) and some importing it (Armenia, Georgia, Tajikistan, and Kyrgyzstan). These economies achieved high growth rates in the period of 1996 – 2011. The oil and natural gas exporters achieved a growth of 7.7%, and the importers achieved 6.4%. However, the fact that the main determinant of growth is the energy sources, especially in the oil and gas exporting countries, makes the growth unstable due to fluctuations in the energy prices. The achievement of these economies to reach stable and sustainable growth rates depends on the structural reforms they will apply, strengthening and diversifying the production infrastructure (IMF, 2014: 2-5). In a sense, these economies need to change the growth model that has been effective up to the present time. Actually, the weakening observed in the growth of these economies due to external shocks, such as a fall in the commodity prices during the period of 2014 – 2016 and a decrease in the growth rates of their main trading partners (Russia and China), reveal this fact. In this context, finding new sources of growth is of great importance for these economies. The diversification of resources, increasing the foreign trade and investments, the elimination of obstacles blocking the private sector from funneling the oil and natural gas exports through different routes to Europe, and the private sector – based growth need to be supported (IMF, 2018: 1-32).