The Resource Factor in the Production Function of the Republic of Kazakhstan: A Literature Review and Research Challenges

The article presents a literature review on the inclusion of the natural resource factor in the production function, specifically in the context of estimating potential output. It begins with the overview of papers by K. Hamilton, E. Naikal, G.-M. Lange and N. Brandt, P. Schreyer, W. Zipperer, who were the first to systematically demonstrate the measurability of the bias in total factor productivity estimates when ignoring the factor of natural resources. A historical overview traces the evolution of the concept – from the Solow residual through the models of S. Dasgupta – W. Hill – R.M. Solow – J. Stiglitz and J. Hartwick’s rule – to modern Dynamic Stochastic General Equilibrium (DSGE) models. The paper discusses the methodological gap between the practices of leading international organizations (the Organization for Economic Cooperation and Development, the International Monetary Fund, and the European Commission) that apply a two-factor production function, and the need for proper accounting for growth sources in resource-dependent economies. Applied studies are reviewed for Russia and other comparable economies. Based on the literature review, key methodological challenges relevant to Kazakhstan in the context of estimating potential output are identified, and their preliminary empirical verification is conducted.