Publication: Eurasia Daily Monitor Volume: 4 Issue: 34

On February 13, the government of Azerbaijan organized a major conference on the implementation of the “State Program on Regional Socioeconomic Development.” The program was adopted in 2004, immediately following the election of President Ilham Aliyev, and 2007 marks the third year of its implementation. Various international financial institutions, foreign embassies accredited to Baku, and regional leaders have participated in this conference along with the full Cabinet of Ministers.

Speaking at the conference, Aliyev said that, in general, the economic development is going well, but problems still exist in the regions in terms of creating favorable conditions for entrepreneurship. “We have managed to double our GDP in just three years. Some countries take 20-30 years to do it. But we did in such a short period,” he declared. Indeed, the budget of the country has increased from $1.5 billion in 2003 to more than $6.5 billion in 2007, and the GDP rate is projected to grow by 35% in 2007. According to Minister of Economic Development Heydar Babayev, this pace of economic growth has allowed the poverty rate to decrease from 49% in 2003 to 19% in 2007.

Government officials were especially proud to announce the creation of 520,000 new jobs in Azerbaijan over the past three years. This aligns well with Aliyev’s campaign pledge to create 600,000 new jobs in the country during his first term in office. Although many opposition members and critics of the government insist that these numbers are inflated by the local authorities, some independent economists who spoke with EDM have said this number could be accurate if it takes into consideration all workers, employed both directly and indirectly by the new enterprises in the regions. “For example, the newly opened sugar processing factory in Imishli has not only provided new job places for more than one hundred persons, but it also created source of income for farmers. This, in a way, can also be considered as job opportunities for them,” said one economist from the region, who preferred to remain anonymous. Overall, however, many observers agree that it is difficult to monitor the number of new jobs created under the auspices of this state program.

Aliyev also spoke of the importance of diversifying the economy and attracting new investments into sectors other than oil. He mentioned the need to develop tourism, infrastructure, and other sectors of economy. In fact, for several months now the Azerbaijani government has been advertising on CNN and EuroNews with video clips touting the country’s tourist attractions. Plans are now in the works to broadcast new infomercials to promote foreign investment in Azerbaijan. Aliyev also mentioned the importance of local investors. “Along with the foreign investors, we must also support our local ones, too. And even the state itself is becoming an active investor. The state investment fund that we have set up will now have more than $1.5 billion to invest into the development and economic projects in the regions.”

One benefit of these measures is that they will stem the flow of people migrating from the regions to Baku in search of jobs by opening new economic opportunities for them in their home regions. Indeed, in the past several years, more hotels, medical centers, secondary schools, roads, and energy facilities were opened in the regions of Azerbaijan than in any period since Azerbaijan become independent in late 1991.

The development boom is largely funded by growing oil and gas revenues. Aliyev spoke of the importance of a just and fair distribution of oil revenues among the citizens of the country. “Oil does not always bring prosperity and happiness. Often it is divided only among a small group of people, while others continue to live in poverty. That is why we need to make our oil fund as transparent as possible to show to people that oil money is going to their needs.”

At the moment, growing oil revenues allow the president and his team to improve the livelihoods of the people. But as Aliyev himself mentioned during the conference, bureaucratic problems and barriers for businessmen still exist. The challenge for the next several years is to create an environment in which economic growth will be driven not by oil revenues, but by a favorable economic environment, free from red tape and harassment of local businesses.

(Zerkalo, News Site, Echo, Trend News Agency, February 10-15)