Browsing by Subject "Azerbaidzan"

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  • Singh, Rupinder; Laurila, Juhani (1999)
    BOFIT Discussion Papers 5/1999
    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. Keywords: Azerbaijan, economic development, oil, Dutch Disease, transition economies
  • Laurila, Juhani (1999)
    BOFIT Online 10/1999
    Azerbaijan is a post-socialist transition country affected by regional tensions similar to those found in Armenia, Georgia, Tajikistan, Macedonia and Croatia.This article examines the historical background of a specific source of tensions, namely the Nagorno-Karabakh issue, its legacies and significance for the economic transition of Azerbaijan.The Azerbijani economy has been among those to suffer most after the demise of the Soviet Union. These legacies underlie Azerbaijan's current situation whereby macroeconomic policies and structural reforms are driven by developments in exploration and exploitation of the Caspian hydrocarbon resources.The author finds evidence that economic and commercial cooperation can reduce political risks and discourage nationalistic power politics both in domestic and international contexts. A firm and continuing commitment by the Azerbaijani government to pursue the process of economic transition combined with peace and stability in the region is necessary for the progress of transition.The rate of reform appears to be critical for the transition process in Azerbaijan and the Caucasus generally.Rapid economic growth fuelled by the expected influx of oil revenues could find Azerbaijan ill prepared to lock in the quality and sustainability of such economic growth.Subsequent papers in this series will deal with the implications for economic development, process of transition, structural reforms in Azerbaijan.** The historical analysis brings up some interesting parallelisms with the ones seen in the recent Balkan crisis. Keywords: Azerbaijan, oil, international organizations, transition economies
  • Laurila, Juhani; Singh, Rupinder (2000)
    BOFIT Discussion Papers 8/2000
    Published in Russian and East European Finance and Trade, vol 37, no 3 (2001), pp. 25-76
    The aim is to review transition literature for evidence that supports sequential reform strategy, as presented in this report. The second part discusses the findings in the context of Azerbaijan, a formerly socialist transition economy with interesting initial conditions.Evidence of the country's current need to focus on improving public services fits well with the sequential reform view. The authors argue that constraints captured by initial conditions (human resources, administrative capacities, traditions, etc.) necessitate sequencing of reforms and outline general aspects of a sequential reform strategy designed to expedite the transition process.The literature survey supports the Washington Consensus recommendations for starting transition with macroeconomic reforms, but over time initial conditions inevitably constrain and necessitate sequencing.In other words, reform efforts initially need to be directed across the widest possible front, but later in transition the emphasis of reform efforts needs to shift from one area to another.In the later stages, emphasis needs to be laid on improvement of public sector governance to support and promote macroeconomic reforms and formation of a healthy corporate sector. Democratic institutions arise with economic growth generated by the corporate sector.