Economy of Azerbaijan
Template:Short description Template:Use dmy dates Template:Infobox economy The economy of Azerbaijan is highly dependent on oil and gas exports, in particular since the completion of the Baku-Tbilisi-Ceyhan Pipeline. The transition to oil production in the late 1990s led to rapid economic growth over the period 1995–2014.<ref name=":2">Template:Cite news</ref><ref name=":3">Template:Cite web</ref> Since 2014, GDP growth has slowed down substantially.<ref name=":3" />
Large oil reserves are a major contributor to Azerbaijan's economy. Gas and oil make up two-thirds of Azerbaijan's GDP, making it one of the top ten most fossil fuel-dependent economies in the world.<ref>Template:Cite web</ref> Gas and oil make up 90% of Azerbaijan's export revenues and 60% of its finances.<ref>Template:Cite web</ref>
Azerbaijan's economy is characterized by corruption and inequality.<ref name=":2" /> The country's oil wealth has significantly strengthened the stability of Ilham Aliyev's regime and enriched ruling elites in Azerbaijan.<ref name=":12">Template:Cite book</ref><ref name=":22">Template:Cite book</ref><ref>Template:Cite book</ref><ref>Template:Cite book</ref> The country's oil wealth has enabled the state to host lavish international events, as well as engage in extensive lobbying efforts abroad.<ref name=":02">Template:Cite web</ref><ref>Template:Cite web</ref>
The national currency is the Azerbaijani manat. The private sector is weak in Azerbaijan, as the economy is dominated by state-owned enterprises.<ref name=":3" /> More than half of the formal labor force works for the government in Azerbaijan.<ref name=":3" />
Economic history of Azerbaijan
[edit]Republic era
[edit]Oil and gas are the most prominent products of Azerbaijan's economy. More than $60 billion was invested into Azerbaijan's oil sector by major international oil companies in AIOC consortium operated by BP. Oil production under the first of these production sharing agreements (PSAs), with the Azerbaijan International Operating Company, began in November 1997 and was about 500,000 barrels per day in 2006. People visit petroleum spas (or "oil spas") to bathe in the local crude in Naftalan.<ref>Azerbaijani answer to oil glut: Bathe in it – Asia – Pacific – International Herald Tribune Template:Webarchive</ref> A leading caviar producer and exporter in the past, Azerbaijan's fishing industry today is concentrated on the dwindling stocks of sturgeon and beluga in the Caspian Sea.
Azerbaijan shares all the problems of the former Soviet republics in making the transition from a command to a market economy, but its energy resources brighten its long-term prospects. Azerbaijan has begun making progress on economic reform, and old economic ties and structures are slowly being replaced. An obstacle to economic progress, including foreign investment, is the continuing conflict with Armenia over the Nagorno-Karabakh region.<ref>Template:Cite web</ref>
In 1992 Azerbaijan became a member of the Economic Cooperation Organization.<ref>Template:Cite web</ref> In 2002, the Azerbaijani merchant marine had 54 ships.<ref>Template:Cite web</ref>
In 2010 Azerbaijan entered into the top eight biggest oil suppliers to EU countries with €9.46 billion.<ref>Template:Cite web</ref> In 2011, the amount of foreign investments in Azerbaijan was $20 billion, a 61% increase from 2010. According to Minister of Economic Development of Azerbaijan, Shahin Mustafayev, in 2011, "$15.7 billion was invested in the non-oil sector, while the restTemplate:Sndin the oil sector".<ref>Template:Cite news</ref>
In 2012, because of its economic performance after the Soviet breakup, Azerbaijan was predicted to become "Tiger of Caucasus".<ref>Template:Cite web</ref><ref>Template:Cite web</ref><ref>Template:Cite web</ref> In 2012, Globalization and World Cities Research Network study ranked Baku as a Gamma-level global city.<ref>Template:Cite web</ref>
In 2015, Turkey and Azerbaijan agreed to boost mutual trade to US$15 billion by 2023.<ref>Template:Cite news</ref>
Macroeconomic trend
[edit]
The following is a chart of trend of gross domestic product of Azerbaijan at market prices<ref>estimated Template:Webarchive by the International Monetary Fund</ref> with figures in USD.
| Year | Gross domestic product PPP | Per capita income (as % of USA) |
|---|---|---|
| 1995 | 19,497,000,000 | 8.78 |
| 2000 | 29,683,000,000 | 10.01 |
| 2005 | 59,087,000,000 | 15.52 |
| 2010 | 138,947,000,000 | 31.78 |
| 2015 | 169,789,000,000 | 32.15 |
For purchasing power parity comparisons, the US dollar was exchanged at 1,565.88 Manats only. Currently, the new Manat is in use, with an exchange rate of about 1 manat = $0.59. Mean graduate pay was $5.76 per man-hour in 2010.
The following table shows the main economic indicators in 1980–2017.
| Year | GDP (in bil. US$ PPP) | GDP per capita (in US$ PPP) | GDP
(in bil. US$ nominal) |
GDP growth (real) | Inflation (in Percent) | Government debt (in % of GDP) |
|---|---|---|---|---|---|---|
| 1993 | 27.4 | 3,658 | 1.3 | −27.4% | 1,129.7% | ... |
| 1995 | 20.0 | 2,610 | 2.4 | −13.0% | 411.8% | 19% |
| 2000 | 30.4 | 3,781 | 5.3 | 6.2% | 1.8% | 23% |
| 2005 | 61.3 | 7,252 | 13.3 | 28.0% | 9.6% | 14% |
| 2006 | 84.9 | 9,927 | 21.0 | 34.5% | 8.2% | 11% |
| 2007 | 109.3 | 12,619 | 33.1 | 25.5% | 16.7% | 8% |
| 2008 | 123.3 | 14,046 | 49.0 | 10.6% | 20.8% | 7% |
| 2009 | 135.9 | 15,231 | 44.3 | 9.4% | 1.5% | 12% |
| 2010 | 143.9 | 15,995 | 52.9 | 4.6% | 5.7% | 13% |
| 2011 | 144.5 | 15,861 | 66.0 | −1.6% | 7.8% | 11% |
| 2012 | 150.2 | 16,271 | 69.7 | 2.1% | 1.1% | 14% |
| 2013 | 161.6 | 17,277 | 74.2 | 5.9% | 2.5% | 13% |
| 2014 | 168.9 | 17,824 | 75.2 | 2.7% | 1.5% | 14% |
| 2015 | 171.8 | 17,915 | 50.8 | 0.6% | 4.1% | 35% |
| 2016 | 168.6 | 17,378 | 37.8 | −3.1% | 12.6% | 51% |
| 2017 | 171.8 | 17,492 | 41.4 | 0.1% | 13.0% | 55% |
Source: IMF<ref>Template:Cite web</ref>
For more than a century the backbone of the Azerbaijani economy has been petroleum, which represented 50 percent of Azerbaijan's GDP in 2005, and is projected to double to almost 125 percent of GDP in 2007.<ref>Azerbaijan: Energy profile Template:Webarchive (Enerpub, 13 December 2007)</ref> Now that Western oil companies are able to tap deep-water oilfields untouched by the Soviets because of poor technology, Azerbaijan is considered one of the most important areas in the world for oil exploration and development. Proven oil reserves in the Caspian Basin, which Azerbaijan shares with Russia, Kazakhstan, Iran, and Turkmenistan, are comparable in size to the North Sea, although exploration is still in the early stages.
Sectors of the economy
[edit]Agriculture
[edit]Template:Main Azerbaijan has the largest agricultural basin in the region. About 54.9 percent of Azerbaijan is agricultural lands. At the beginning of 2007 there were Template:Convert of utilized agricultural area.<ref name="AG">Template:Cite web</ref> In the same year, the total wood resources counted Template:Convert.<ref name="AG"/> Azerbaijan's agricultural scientific research institutes are focused on meadows and pastures, horticulture and subtropical crops, leaf vegetables, viticulture and wine-making, cotton growing and medicinal plants.<ref>Template:Cite web</ref> In some lands, it is profitable to grow grain, potatoes, sugar beets, cotton and tobacco. Livestock, dairy products, and wine and spirits are also important farm products. The Caspian fishing industry is concentrated on the dwindling stocks of sturgeon and beluga.
Some portions of most products that were previously imported from abroad have begun to be produced locally (among them are Coca-Cola by Coca-Cola Bottlers LTD, beer by Baki-Kastel, parquet by Nehir and oil pipes by EUPEC Pipe Coating Azerbaijan).<ref>Template:Cite web</ref>
A new program which is prepared by the European Union is aimed to supporting the economic diversification of Azerbaijan.<ref>https://ec.europa.eu/neighbourhood-enlargement/news_corner/news/eu4lankaran-%E2%80%93-new-eu-action-boost-rural-and-regional-competitiveness-azerbaijan_en Template:Dead link</ref>
Manufacturing
[edit]
In 2007, mining and hydrocarbon industries accounted for well over 95 percent of the Azerbaijani economy. Diversification of the economy into manufacturing industries remains a long-term issue.<ref>Template:Cite web</ref>
As of the late 2000s, the defense industry of Azerbaijan has emerged as an autonomous entity with a growing defense production capability. The ministry is cooperating with the defense sectors of Ukraine, Belarus and Pakistan.<ref name="autogenerated1">Template:Cite news</ref> Along with other contracts, Azerbaijani defense industries and Turkish companies, Azerbaijan will produce 40 mm revolver grenade launchers, 107 mm and 122 mm MLRS systems, Cobra 4×4 vehicles and joint modernization of BTR vehicles in Baku.<ref name="brothership1">Template:Cite web</ref><ref name="brothership2">Azerbaijan’s Ministry of Defense Industry plans to assume several projects on technical modernization of Armed Forces Template:Webarchive</ref><ref name="brothership3">Template:Cite web</ref><ref name="brothership4">Azerbaijani Defense Industry Ministry conducts negotiations with Turkish "Otokar" Company on production of armored vehicles Template:Webarchive</ref>
Financial and business services
[edit]Template:Main The banking sector remains small in relation to the size of the Azerbaijani economy.
Telecommunications
[edit]The Azerbaijan telecommunications sector is embroiled in corruption. Azerbaijan President Ilham Aliyev and his family own two of Azerbaijan's largest mobile providers (Azerfon and Azercell) through offshore companies and potentially control three-quarters of the mobile market in Azerbaijan.<ref name=":4">Template:Cite news</ref> The third large mobile provider is Bakcell, which is registered as a company in an offshore tax haven and whose owners are unknown.<ref name=":4" /> Ownership of the mobile providers in Azerbaijan enables the ruling Aliyev family to monitor phone calls and internet activity.<ref name=":4" />
Investigative reporting revealed that Azerbaijani President Ilham Aliyev and his family made more than $1 billion when state shares of mobile operators were transferred to a purportedly "local partner" which was in reality owned by the Aliyev family's offshore companies.<ref>Template:Cite web</ref>
Azerbaijan has relatively expensive call rates relative to comparable countries. The high prices are possibly due to consolidated control of the mobile market and a lack of competition.<ref name=":4" />
The Azerbaijan government has stated that it wants to create a high-tech sector in Azerbaijan.<ref>Template:Cite web</ref>
Tourism
[edit]
Tourism is an important part of the economy of Azerbaijan. The country was a well-known tourist spot in the 1980s. However, the fall of the Soviet Union, and the First Nagorno-Karabakh War during the 1988–1994 period, damaged the tourist industry and the image of Azerbaijan as a tourist destination.<ref>Template:Cite web</ref>
It was not until the 2000s that the tourism industry began to recover, and the country has since experienced a high rate of growth in the number of tourist visits and overnight stays.<ref>Azərbaycan Qarabağın turizm imkanlarını təbliğ edir Template:In lang</ref> In recent years, Azerbaijan has also become a popular destination for religious, spa, and health care tourism.<ref name="Baku Boom Has Yet to Hit Regions">Template:Cite web</ref> During winter, the Shahdag Winter Complex offers skiing.
The government of Azerbaijan has set the development of Azerbaijan as an elite tourist destination a top priority.<ref>Template:Cite web</ref> It is a national strategy to make tourism a major, if not the single largest, contributor to the Azerbaijani economy.<ref>Template:Cite web</ref> These activities are regulated by the State Tourism Agency and the Ministry of Culture. The Formula One Grand Prix is held in Baku, the capital city, and has been held here for years.
Currency system
[edit]Template:See also The Azerbaijani manat is the currency of Azerbaijani, denominated as the manat, subdivided into 100 qapik. The manat is issued by the Central Bank of Azerbaijan, the monetary authority of Azerbaijan. The ISO 4217 abbreviation is AZN. The Latinised symbol is (File:Azeri manat symbol.svg).
The manat is held in a floating exchange-rate system, managed primarily against the US dollar. The rate of exchange (Azerbaijani manat per US$1) for 28 January 2016, was AZN 1.60.
There is a complex relationship between Azerbaijan's balance of trade, inflation, measured by the consumer price index and the value of its currency. Despite allowing the value of the manat to "float", Azerbaijan's central bank has decisive ability to control its value in relationship to other currencies.
Infrastructure
[edit]Energy
[edit]Template:Main Template:Further
Two-thirds of Azerbaijan is rich in oil and natural gas.<ref name="AZ">Template:Cite web</ref> The region of the Lesser Caucasus accounts for most of the country's gold, silver, iron, copper, titanium, chromium, manganese, cobalt, molybdenum, complex ore and antimony.<ref name="AZ"/> In September 1994, a 30-year contract was signed between the State Oil Company of Azerbaijan Republic (SOCAR) and 13 oil companies, among them Amoco, BP, ExxonMobil, Lukoil and Statoil.<ref name="AZE">Template:Cite web</ref> As Western oil companies are able to tap deep-water oilfields untouched by the Soviet exploitation, Azerbaijan is considered one of the most important spots in the world for oil exploration and development.<ref>Template:Cite web</ref> Azeriqaz, a sub-company of SOCAR, intends to ensure full gasification of the country by 2021.<ref>Template:Cite web</ref>
Transportation
[edit]Template:Main The convenient location of Azerbaijan on the crossroad of major international traffic arteries, such as the Silk Road and the south–north corridor, highlights the strategic importance of the transportation sector for the country's economy.<ref>Template:Cite web</ref> The transport sector in the country includes roads, railways, aviation, and maritime transport.
Azerbaijan is also an important economic hub in the transportation of raw materials. The Baku-Tbilisi-Ceyhan pipeline (BTC) became operational in May 2006 and extends more than 1,774 kilometers through the territories of Azerbaijan, Georgia and Turkey. The BTC is designed to transport up to 50 million tons of crude oil annually and carries oil from the Caspian Sea oilfields to global markets.<ref>Template:Cite journal </ref> The South Caucasus Pipeline, also stretching through the territory of Azerbaijan, Georgia and Turkey, became operational at the end of 2006 and offers additional gas supplies to the European market from the Shah Deniz gas field. Shah Deniz is expected to produce up to 296 billion cubic meters of natural gas per year.<ref>Template:Cite press release</ref> Azerbaijan also plays a major role in the EU-sponsored Silk Road Project.
In 2012, the construction of Kars–Tbilisi–Baku railway expected to provide transportation between Asia and Europe through connecting the railways of China and Kazakhstan in the east with Turkey's Marmaray to the European railway system in the west. Broad gauge railways in 2010 stretched for Template:Convert and electrified railways numbered Template:Convert. By 2010, there were 35 airports and one heliport.<ref name="CIAWFAJ"/>
Regulation
[edit]Single window system shares needed information through a single gateway with all organizations serving in trade field, as well as abolishes useless processes and raises the effectiveness of cooperation among different parties. 73 economies implement single window system in the world. Azerbaijan started to implement this system in 2009.<ref name=":0">Template:Cite book</ref> It implemented an E-Government portal as well.<ref>Template:Cite web</ref><ref>Template:Cite web</ref>
A single-window system was established by a decree of the Azerbaijani President issued in 2007, 30 April, in order to simplify export-import procedures, innovate customs services, and improve the trade environment.<ref name=":0" /> The president appointed the State Customs Committee as the leading body of controlling goods and transportation passing through the borders of the country in 2008.<ref name=":1">Template:Cite web</ref>
The State Migration Service issues appropriate permits for foreigners and stateless persons coming to Azerbaijan to live and work. The "single window" principle has been applied on migration management processes starting from 1 July 2009 according to the Decree.<ref>Template:Cite web</ref>
Poverty
[edit]Other economic indicators
[edit]- Data from CIA World Factbook<ref name="CIAWFAJ"/> unless noted otherwise
- Investment (gross fixed)
17% of GDP (2011 est.)
- Household income or consumption by percentage share
- lowest 10%: 3.4%
- highest 10%: 27.4% (2008)
- Inflation rate (consumer prices)
1.1% (2012 est.)
- Agriculture
- utilized agricultural land: Template:Convert (2011)<ref name="AG"/>
- total wood resources: 144,2 million cubic meters
- crops: cotton, rice and other grains, grapes, fruit, vegetables, tea, tobacco
- livestock products: beef, mutton, poultry, milk, eggs
- Industrial production growth rate
-3% (2011 est.)
- Electricity
- production: 22,55 billion kWh (2008)
- consumption: 18,8 billion kWh (2008)
- exports: 812 million kWh (2008)
- imports: 596 million kWh (2008)
- Current account balance
- $11,12 billion (2011 est.)
- ExportsTemplate:Snd commodities
- petroleum and natural gas, petroleum products, oilfield equipment; steel, iron ore, cement; chemicals, petrochemicals, textiles, machinery, cotton, foodstuffs.
- Reserves of foreign exchange and gold
- $7,146 billion (2011 est.)
- DebtTemplate:Snd external
- $3.89 billion (2011 est.)
- Currency
- 1 Manat = 100 gepik
- Exchange rates
- Azerbaijani manat per US dollarTemplate:Snd 1.7 (for 22 November 2020)<ref name="autogenerated2">http://www.cbar.az/ Template:Webarchive Central Bank of the Azerbaijan Republic, accessed 24 July 2015</ref>
- Azerbaijani manat per EuroTemplate:Snd 2.01 (for 22 November 2020)<ref name="autogenerated2"/>
- Fiscal year
- Calendar year
See also
[edit]- Azerbaijan and the International Monetary Fund
- List of companies of Azerbaijan
- Baku-Tbilisi-Ceyhan pipeline
- State Oil Company of Azerbaijan
- Petroleum industry in Azerbaijan
- Agriculture in Azerbaijan
- Tourism in Azerbaijan
- Sheep farming in Azerbaijan
References
[edit]Further reading
[edit]- Habibov, Nazim: "Poverty in Azerbaijan" in the Caucasus Analytical Digest No. 34
- Template:Cite book
External links
[edit]- Hübner, Gerald: "As If Nothing Happened? How Azerbaijan's Economy Manages to Sail Through Stormy Weather" in the Caucasus Analytical Digest No. 18
Template:Azerbaijan topics Template:Asia in topic Template:Economy of Europe