Azerbaijan Economy (1991-2016)

Economy of Azerbaijan : 25 years of independence, 2016

The social and political processes, started in 1980s, resulted with the collapse of the USSR, and all union republics became independent. Azerbaijan was one of the first countries, which gained independence in those years. Azerbaijan declared independence on 18th of October 1991. Thus Azerbaijan became one of the countries, which balances economic and political relationships in the region. This characteristic comes from the geopolitical position of Azerbaijan. Located in the region of the Southern Caucasus, Azerbaijan has borders with the Caspian Sea to the east, Georgia and Russia to the north, Iran to the South, and Armenia to the southwest and west. A small part of Nakhchivan Autonomous Republic also has borders with Turkey to the northwest. The transition period in Azerbaijan was observed some problems. However the country could maintain independence. To do so, several economic, social and political problems were resolved. The main problem, which Azerbaijan confronted, was structural. Therefore, it was important to create economy, which can manage itself independently. Throughout the years, some important steps have been taken in order to liberalize the economy. Azerbaijan has huge natural resources, which triggered the development of economy. Oil and gas resources are the most important wealth of Azerbaijan. In 2015, 90% of the export belongs to the energy carriers. This figure also shows the importance of the energy sector in Azerbaijan economy. For this reason, energy resources should be used relevantly. It was not possible to have investment and then divert it to the relevant sectors, without the interference of the government in the transition period. Therefore regulator also should play role, with the invisible hand in order to stabilize free market economy. The political stability was obtained during Heydar Aliyev’s government. The strong political power triggered economic development. Ilham Aliyev, the successor of nationwide leader Heydar Aliyev continues to realize the political program of his father.

SSRN Electronic Journal, 2012

Nevertheless, despite all the above-mentioned, the average growth rate of the economy of Azerbaijan during the 20 years since the country restored its independence has been characterised with positive results particularly due to the rapid growth in the second decade. In 2008, the GDP production in Azerbaijan was twice more than that of 1990. According to the results of 2010, Azerbaijan was ranked the 72th country of the world for of the GDP with a national income of USD 54.37bln 2. Analysis and assessment of the lost opportunities and lessons learnt over the last 20 years indicate that the efficiency of resource utilization in replacing quantity indicators by quality indicators was not adequately efficient. Thus, the rupture of traditional economic relations at the beginning of 90s, e.g. after the collapse of the Soviet Union on the one hand and the war with Armenia and the occupation of Nagorno-Karabakh and adjacent regions to it by Armenia on the other hand might be considered as decisive objective factors causing decline or regress of the economy in the initial years of independence. Nevertheless, alongside with this, the delay of economic transformation reforms due to various reasons, including the pending liberalization of prices and de-nationalization measures in comparison to other post-soviet countries prolonged the period of transformation of Azerbaijan's economy from regress to revival. For this reason, the first decade of independence is memorized as the exit from the crisis with reform initiatives to ensure transition from one economic system into another. Afterwards, starting from the middle of the second decade of independence, increasing oil revenues caused a delay in existing reform initiatives by setting at rest the government, which slowed down the liberalization efforts and set back the course of establishing institutions envisaged for ensuring the sustainability of the economic growth. In parallel, during the period of re-obtaining its independence, Azerbaijan became a member of authoritative financial and political organizations such as World Bank, International Monetary Fund, European Bank for Reconstruction and Development, Islamic Development Bank, World Customs Committee. It also joined the European Neighbourhood Policy and the Eastern Partnership Program. Regress stage of the economy (1992-1995) An assessment of the economy of the passed 20 years according to the stages shows that high inflation rates were one of the considerable features of the 1st stage (1992-1995). During this 1 President Ilham Aliyev stated during his speech on November 2 2009, at the 90 th anniversary of the Baku State University that Azerbaijan had ended its transition period in the economic field.

Since Independence Svante e. Cornell Azerbaijan Since Independence offers a comprehensive introduction to modern Azerbaijan, a post-Soviet republic located on the western shore of the Caspian Sea. This small country has outsized importance due to its strategic location at the crossroads of Europe and Asia, its energy wealth, and its historical experience as an early modernizer in the Muslim world.

The Caucasus & Globalization, 2008

This article takes a look at the main results of the economic reforms in Azerbaijan since the country gained its state independence. The most important result is the country’s economic sovereignty, which is expressed, first, in sufficient independence to choose its own model of economic development, second, in the financial self-sufficiency of the national economy, and, third, in the state’s (in the form of the government and private companies) retention of its right to own most of the country’s economic potential. The transfer to mainly market methods of economic regulation is analyzed from the viewpoint of forms of ownership, the establishment of free price formation and fair competition, and the liberalization of foreign economic interactions. All of these problems are viewed in the context of interstate comparisons. The economic progress of recent years is analyzed separately. The authors show that the main factors directly or indirectly hindering the country’s efficient economic development are related to regional political contradictions and primarily to Armenia’s occupation of part of Azerbaijan’s territory. In the immediate future, the main efforts will be put into gradually moving away from competitive advantages based on material factors of production and transferring to competitiveness based on investments and efficiency; reducing the size of the informal economy; and enhancing the sectoral and territorial make-up of the economy.

E x p e r t J o u r n a l o f E c o n o mi c s ( 2 0 1 4 ) 2 , 4 5 -54 © 2 0 1 4 T h e Au t h o r s . P u b l i s h e d b y S p r i n t In v e s t i f y . IS S N 2 3 5 9 -7 7 0 4 E c o n o m i c s . E x p e r t J o u r n a l s . c o m 45

SSRN Journal

After regaining its independence on 18 October 1991, the Republic of Azerbaijan started the transformation to the market-based economy and the integration into the world economy. The country's oil and natural gas reserves have been considered the main source for financing a range of government programs for reforms. On the one hand, these reserves had to be used effectively; on the other hand, there was a huge demand for foreign investment for extraction. To this end, Azerbaijan has signed "Contract of the Century" in 1994. Although Azerbaijan has wide oil and natural gas reserves, it has faced a number of difficulties in its transition path. This study analyzes these problems and reforms for solving them. One of the types of the problems related to the economic structure of the former Soviet Union: disruption of the economic ties between the republics resulted in a decline of production, high levels of unemployment and prices and consequently led to an economic recession in all of the republics. Another set of problems related to the lack of sufficient institutional bases to transform to the market economy. Moreover, internal conflicts between the political parties and groups for having authority as well as political chaos in the republic can be considered other serious problems during the transition period. Furthermore, Karabakh war and occupation of 20 percent of the Azerbaijani territory by the Armenian military forces had made the situation extremely complicated. Despite all of these extremes, Azerbaijan transformed to the marketbased economy decidedly and even became one of the fast growing countries of the world. Even in 2013, with the GDP growth rate of 5.6 percent, Azerbaijan was a leader among growing economies. In parallel with this significant economic development, there is still a need for some socioeconomic and institutional reforms in order to get a well-functioning market-based economy in Azerbaijan.

SSRN Electronic Journal, 1999

The macro economic stabilisation in Azerbaijan has been successful. Following cessation of conflict with Armenia, and decline of GDP by 60 per cent from 1990 to 1995, the government in effect implemented a big-bang reform process in 1995. The inflation rate has now declined to the lowest rate of any transition country and important reforms in the monetary-fiscal mix have been undertaken. The second plank of first generation reforms, liberalisation, has also been successfully implemented with liberalisation of prices, the trade and foreign exchange regimes and virtual completion of small-scale privatisation, although the onset of the Russian crisis in 1998 has impacted negatively both internal and external balances. The paper presents the current economic picture for Azerbaijan and then assesses economic policy issues facing the country. Azerbaijan is well endowed with natural resources, particularly oil but also gas. The second part of the paper considers the question by focussing on policy issues related to the potential flow of oil-based monies into Azerbaijan. The possibility of the "Dutch Disease" syndrome impacting Azerbaijan through a rising real exchange rate on the non-oil sector is not considered to be a problem at present but is expected to become a policy concern in the medium-to long term. Structural reforms in public finance to deal with expected surpluses are lagging and are necessary in the next phase of the transition of Azerbaijan. Moreover, significant reforms are required in banking-privatisation, improvement in regulation and supervision and in the implementation of supporting legal rights, given the current lack of financial intermediation.

İKTİSADİ VE İDARİ BİLİMLER …, 2010