Natural Resources and Economic Growth

Introduction

Largely, in order to have a sustainable development process, these factors related to social, economic, environmental, and political factors must interlink effectively coupled with availability of resources. Betz et al. (2015) illustrated that major mainstays of development for most developed and developing region are existence and discovery of natural resources such as minerals and recently oil reserves and natural gases. For example, Middle East countries such as United Arabs Emirates, Saudi Arab, Iran, Qatar, and Kuwait have had drastic economic growth measured rapid development in infrastructure, gross domestic product (GPD) (gross national income), low unemployment rate, improved standard of living, and global competitiveness following discover and exploration of oil reserves and natural gases. OECD (2017) reported that areas such as Astana city, Atyrau, and Kyzylorda with economic bases lower-than-average recorded GDP rates above 10% due to link to natural resources. Nevertheless, it is worth noting that discovery of this natural resources alone does not propel a nation or community into economic prosperity or development region. Le Billon et al. (2013) and Betz et al. (2015) argued that most countries with greatest natural resources endowment have worst development record measured in deprivation, inequality, lack of infrastructure, and poverty levels. Such nations as Venezuela and Democratic Republic of Congo (DRC) have huge deposits of natural resources but poverty levels, health problems, depravation, hunger, social peace, and lack of infrastructure are rampant.

Study conducted by Ahrend et al. (2014) on factors that contribute to cities’ productivity focusing primarily on role held by urban governance, highlighted that population size (within and nearby cities) directly influences the productivity pointing that doubling the city size can result in 2-5% increase in productivity. On the other hand, the findings showed that cities with poor fragmented city governance tend to have lower productivity levels (ibid). Ideally larger population of cities provide a large pool of choice in provision of public services, better accountability, and well-thought through solutions, occasionally these can be problematic in the sense that formulation of policies, strategies, and investment plans towards land use, transportation systems, environmental regulation, economic promotion, and ease of doing business demand city-wide coordination.

Surgut city dubbed as the Oil Capital of Russia has its economy tied to oil and natural gas production. Before 1960s, the city urbanization was relatively small with its economy supported to mainly fishing. However, following discovering and exploitation of oil reserves and natural gas, it economy diversified and boomed resulting to being granted a township status. Currently, the city harbours the most developed infrastructure network (railways, airports, road networks, and ports) and highest population than Khanty-Mansiysk city, an administrative centre of the Khanty-Mansi Autonomous Okrug – Yugra federal subject of Russia. In addition to hub to advanced industries and technological growth, the city attracts large tourists, which collective played a major in drastic population and its economic growth.

On the other hand, formerly referred to as Guryev until 1992, Atyrau city in the western region of Kazakhstan has a population of approximately 180,000 making 15th most populous city in the country (World Population Review, 2019). Despite having a diversified economy supported mainly by fishing cannery, oil refinery, construction industry, meat-packing plant, and other natural resources, the city experiences high unemployment rate and low infrastructural development (OECD, 2017). Reports indicate high in health, in birth, and death rate and poor wellbeing of the population residing in the region.

Research problem

Evidently, Surgut city has benefited enormously on the discovery and exploration of natural resources acting as core factors on its infrastructural and population growth unlike Guryev city in Kazakhstan despite have nearly the same amount and resources types primarily natural resources and fishing industry as well as huge supporting industries. The two cities share huge similarity spanning from economic background (fishing), population growth, to existence of natural resources but its economic development measured by infrastructure, human capital, and gross income differ significantly.

Aim of the study

Therefore, this study aim to investigate the reasons to why these two cities, Surgut in Russia and Atyrau in Kazakhstan have difference regional development despite both having large oil deposits.

Research objectives

The following objectives will form the basis of addressing the research aim and questions

1. To analysis critically the core determining factors of regional development that include historical background, existence of natural resources, human capital, and governance

2. To examine the regional development of Surgut in Russia and Atyrau in Kazakhstan determining core driving factors

3. To outline core differentiating factors of Surgut in Russia and Atyrau in Kazakhstan development difference

4. To appraise critically the data collected then formulate inferences and recommendation on reasons to difference in regional development between Surgut and Atyrau

Research methodology

This research focuses on determining the reasons to difference in regional development of two cities despite both being rich in oil resources and sharing economic background (historically both were fishing ports). As such, in order to have a deep understanding the reasons behind this difference, this research will follow qualitative approach. Based on Silverman (2016) argument, qualitative research approach aids in exploring underlying factors to issues being investigated that include capturing participants’ opinions and supporting factors providing insights into the problem in question. As such, this research intent to explore and understand ways in which factors emanating from historical background, natural resources, human capital, and governance affects productivity of the two cities.

In data collection, it will make use of secondary data systematically reviewing peer-reviewed articles, government documents, institution publication, and reporting from major news outlets. The identified sources accessed either from internet databases or libraries, will be sampled eliminating documents older than 10years since publication, not institution official documentation, reporting from small and unreliable sources, and not peer-reviewed articles. Lastly, in order to adhere to ethical consideration, it will ensure representation of data and information is capture accurately and accordingly avoiding biasness and misrepresentation during data collection, analysis, and presentation.

References

Ahrend, R., Farchy, E., Kaplanis, I. and Lembcke, A.C., 2014. What makes cities more productive? Evidence on the role of urban governance from five OECD countries.

Betz, M.R., Partridge, M.D., Farren, M. and Lobao, L., 2015. Coal mining, economic development, and the natural resources curse. Energy Economics, 50, pp.105-116.

Guogang, W., 2010. Urbanization: Core of china economic development mode transition [J]. Economic Research Journal, 12, pp.70-81.

Le Billon, P., 2013. Fuelling war: Natural resources and armed conflicts. Routledge.

OECD (2017), OECD Territorial Reviews: Kazakhstan, OECD Territorial Reviews, OECD Publishing, Paris.

Silverman, D. ed., 2016. Qualitative research. Sage.