Economic advance, living standards and inequality in oil-producing former Soviet Union countries

Abstract

This article covers the way oil export incomes influence economic development and inequality of income distribution. Possible types of inequality related to structural changes in the economies of oil-producing countries are identified. Dependency of different economies on oil and gas export has been analyzed based on the indicators suggested. A breakdown of oil-producing countries into four groups has been provided on the basis of average per capita incomes and volumes of oil extraction per capita. Peculiarities of resource-dependency of three major post-Soviet oil and gas exporters — Russia, Kazakhstan and Azerbaijan — have been analyzed. It has been demonstrated that dependency on resources modifies the structure of these countries’ economies, which leads to income inequality based on employment via a mechanism of labor compensation changes in different sectors of the economy. Oil-producing countries need the system policy on the effective use of income from the sale of energy to improve living standards and address emerging socio-economic challenges.