Eurasian Economists Association

International Conference on Eurasian Economies

17-18 September 2013 – St. Petersburg, RUSSIA

Paper detail

Paper ID : 681
Status : Paper published
Language : Turkish
Topic : Regional Economics
Presenter: Assoc. Prof. Dr. Elchin Suleymanov
Session : 4B Orta Asya Ekonomileri

Problems Encountered during the Transition to Market Economy in Azerbaijan and Solution Attempts
Azerbaycan’ın Piyasa Ekonomisine Geçiş Sürecinde Karşılaştığı Sorunlar ve Çözüm Arayışları

Abstract

After re-gaining its independence on 18 October 1991, the Republic of Azerbaijan started to transform to the market-based economy and to integrate into the world economy. The country’s oil and natural gas reserves have been considered the main source for financing 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 way. This study analyzes these problems and reforms for solving them. One of the types of the problems were related to the economic structure of the former Soviet Union: disruption of the economic ties between the republics resulted in 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 was related to 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 market-based economy decidedly and even became one of the fast growing countries of the world. Even in 2006, with the GDP growth rate of 34.5 percent, Azerbaijan was a leader among growing economies. In parallel with this significant economic development, there is still a need for some socio-economic and institutional reforms in order to get a well-functioned market-based economy in Azerbaijan.

JEL codes: O11, R11, F41

Bulut, Cihan, Suleymanov, Elchin, Hasanov, Fakhri (2013). "Problems Encountered during the Transition to Market Economy in Azerbaijan and Solution Attempts" in Proceedings of International Conference of Eurasian Economies 2013, pp.394-402, St. Petersburg, RUSSIA.

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Session 4B: Orta Asya Ekonomileri

Beykent University Turkish Central Bank TIKA