THE ECONOMY

Fuad MURSHUDLI

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Fuad Murshudli, Ph.D. (Econ.), advisor to chairman of the board, International Bank of Azerbaijan (Baku, Azerbaijan)

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Introduction

The socially oriented market economy chosen by Azerbaijan as a development model for the country is being created through phased liberalization of economic activity combined with active government support for priority sectors. Other important constituents of this process include measures to create a favorable investment environment and a proper market infrastructure and to improve the social protection system. The Azerbaijan economy today is one of the most dynamically developing economies in the world.

Macroeconomic Indicators

Macroeconomic indicators point to the continuation of positive trends characteristic of the republic’s economy since the turn of the century. In 2005, GDP grew by 26.4% (compared to 10.2% in 2004). In terms of GDP growth, Azerbaijan ranked first in the world. Per capita GDP was $1,518, and at purchasing power parity (3.38), $5,129. The main driving force behind this recovery was industrial production, which increased by 33.5% (compared to 5.7% in 2004). This was due in large part to high oil prices and increasing oil production.

Fixed capital investment reached 28.9 trillion manats (Azerbaijan’s currency unit, AZM), with investment in production constituting about 87% of the total. In terms of per capita investment ($1,518), the republic is high on the list of………………..

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