Azerbaijans 20 years of economic independence: Is it really independence? November 29, 2011 Ingilab Ahmadov.

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)

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Source: http://www.economywatch.com/economic-statistics/country/

South Caucasus GDP in 2010

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South Caucasus international reserves in 2011

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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 %)

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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

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Negative

• Unemployment

• Loss of Soviet industry, agricultural sector

• Loss of robust education system

• Ejection of labor forces

• Scale of corruption

What gave us 20 years of economic independence?

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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

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Disadvantages:

• Inflation

• Loss of Competitiveness

• Costly/heavy economy

• Lack of job-created economy

• Consumer economy

• Lack of innovation

Resource abundant economy

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 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

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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

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Thank You!

12Dr.Ingilab Ahmadov