Azerbaijan’s 20 years of economic
independence:
Is it really independence?
November 29, 2011
Ingilab Ahmadov
SC GDP per capita, dynamics over 20
years (PPP)
100
7.5 time
90
80
70
60
AZ
GEO
ARM
50
40
30
3.3 time
5.6 time
20
10
0
1995
Source:
2010
http://www.economywatch.com/economic-statistics/country/
Dr.Ingilab Ahmadov
2
South Caucasus GDP in 2010
Georgia
15%
Armenia
11%
74%
Azerbaijan
Dr.Ingilab Ahmadov
3
South Caucasus international reserves in
2011
Armenia
Georgia
$ 1,8 bln.
$ 2,1 bln.
$ 40 bln.
Azerbaijan
Dr.Ingilab Ahmadov
4
Oil in Azeri economy (2010)
 Robust economic growth in recent years, supported by high
oil production and export and higher oil prices
 Oil sector’s share in GDP (58%)
 Oil sector’s share in Budget revenues (64%)
 Oil sector’s share in Export (92,5 %)
Dr.Ingilab Ahmadov
5
What gave us 20 years of economic
independence?
Positive
•
Green light on Western capital coming into economy
•
Substantial reconstruction of the infrastructure
•
Baku become one of the most beautiful and richest cities of
FSU
•
Integration into European and world economy, technology
and management
Dr.Ingilab Ahmadov
6
What gave us 20 years of economic
independence?
Negative
•
Unemployment
•
Loss of Soviet industry, agricultural sector
•
Loss of robust education system
•
Ejection of labor forces
•
Scale of corruption
Dr.Ingilab Ahmadov
7
Resource abundant economy
Advantages:
• State expansion economy (Keynes)
• Massive infrastructure reconstruction
• Initiator of regional infrastructure projects
• Surplus & international reserves
• High oil & gas prices and gaining momentum for the
expansion of investment abroad
Dr.Ingilab Ahmadov
8
Resource abundant economy
Disadvantages:
• Inflation
• Loss of Competitiveness
• Costly/heavy economy
• Lack of job-created economy
• Consumer economy
• Lack of innovation
Dr.Ingilab Ahmadov
9
Is it truly sustainable?
• Economy developments as sustainable as long as O&G
resources are enough
• Oil & gas resources are quite enough until 2025
• Oil Fund assets will reach $100 bln. (equal to GDP) by 2025
• Transit resources as an attempted alternative to natural
resources
• SOCAR Black Sea investment strategy
Dr.Ingilab Ahmadov
10
Is it truly a market economy?
• Not WTO member
• Monopoly, barrier on access to market
• Old/new economy
• Business, bureaucracy and politics are not
separated
Dr.Ingilab Ahmadov
11
Thank You!
Dr.Ingilab Ahmadov
12