World-renowned economist Nouriel Roubini predicts bright future to Kazakhstan08 november 2014, 14:53
World-renowned economist Nouriel Roubini has predicted a bright future to Kazakhstan, Tengrinews reports.
"You really have what it takes to achieve a great success. You have the potential to succeed in public services for the society and in diversification of the economy. You have the prerequisites even at this point, with the current average income, to escape the resource curse, I can see this. And if everything continues to develop along these lines, you will be able to escape both traps (the resource curse and the average income trap) in the next 20-30 years. I predict that if everything goes alone these lines, then the development will be good and all the goals set for this period will indeed be achieved,” Nouriel Roubini said at the forum in Astana in the first decade of October.
The resource curse, also known as the paradox of plenty, refers to the paradox that countries and regions with an abundance of natural resources, particularly non-renewable resources like minerals and fuels, tend to have less economic growth and worse development outcomes than countries with fewer natural resources. The reason behind this is the inability of these countries rich in natural resources to use that wealth in a right way to boost their economies.
There are also other causes including a decline in the competitiveness of other economic sectors (caused by appreciation of the real exchange rate as resource revenues enter an economy, a phenomenon known as Dutch disease), volatility of revenues from the natural resource sector due to exposure to global commodity market swings, government mismanagement of resources, or weak, unstable or corrupt institutions (possibly due to the easily diverted actual or anticipated revenue stream from extractive activities).
However, not all resource-rich countries fall in this trap. One of the brightest examples is Botswana, the largest diamond producer in the world with the biggest diamond mines, that experienced significant economic growth over several decades.
“Kazakhstan is on the right way. With appropriate economic and structural reforms, Kazakhstan has a chance to turn from a country with a medium income per capita into a country with a much higher level of per capita income,” he said.
“I have seen a great desire for transformation and changes here. You have the desire to move forward and the management of the Fund (Samruk Kazyna National Wealth Fund) understands that it is important not only to increase efficiency and profits of the company, but also the social responsibility to the society,” Nouriel Roubini said.
He also broached the current situation with the US dollar. “Some have predicted that the US dollar would collapse and disappear as a currency, as the main reserve unit and that gold and the Chinese currency would become increasingly important. But I believe the dollar is not so weak, and the American economy is growing faster than the European or Japanese ones. The strength of the US economy is reflected in the strengthening of the dollar. Therefore, I cannot say that the dollar will disappear in the near future,” he said.
"At this point, dollar remains to be the main currency, most of international transactions are made in dollars, major investments are made in dollars and prices for natural resources, such as oil, are set in dollars despite the fact that there are other global currencies such as euro, British pound, Swiss krone and the Japanese currency. I think new currencies will gradually emerge with the development of international markets. I am not saying that they all will be as important as the dollar, but certain currencies will gain importance, for example, the Chinese currency will be steadily becoming more significant," he said.
Nouriel Roubini came to Kazakhstan to take part in Samruk Kazyna Transformation forum in early October. The Transformation Forum took place on October 6 and gathered famous experts from all over the world, including Ichak Adizes and representatives of international financial institutions, such as the EBRD and OECD.
Modernization of the Welfare Fund in the framework of the Transformation Program aims to improve its investment attractiveness, optimize business processes and portfolio structure and rid its structure of bureaucratization in a large-scale reorganization.
Nouriel Roubini is an American economist. He is famous for predicting the collapse of the United States real estate market and the worldwide recession that started in 2008. He teaches at New York University's Stern School of Business and is the chairman of Roubini Global Economics, an economic consultancy firm.
By Assel Satubaldina (Renat Tashkinbayev contributed to the story)