Azerbaijan Economy Essay Example

The ADB, EBRD, and Islamic Development Bank have all decreased their investments in Azerbaijan by 40.1%, 14.7%, and 16.3% respectively. WB is presently the primary global financial institution that supplies credit to Azerbaijan.

The list of organizations providing credits to Azerbaijan includes ADB, EBRD, IDB, and The Kuwait Fund for Arab Economic Development. While some of them increased their credits, such as WB and The Kuwait Fund for Arab Economic Development, the overall credits provided to Azerbaijan by foreign organizations have decreased. This is due to an apparent decline in the financing of Azerbaijan's economy by international institutions.

Years ago, it was observed that due to Azerbaijan's rising oil revenue, global financial institutions didn't require credits to be given to the country. Nevertheless, the government decided to maintain such partnerships, believing them to be significant. Refusing foreign financial organizations would not have been appropriate, resulting in an inevitable decrease in credited amounts.

Azerbaijan has seen a decline in foreign investment, which can be attributed to various reasons such as the ongoing global economic slowdown, increased oil prices resulting in higher production expenses and reduced overall investment. Moreover, foreign enterprises have been cautious about international business for some time.

The influx of investment from developed nations like the USA, England, and Japan has had a significant impact on Azerbaijan's economy, exacerbating existing tensions. However, there has also been a rise in domestic investments which has led to an expansion of businesses owned by locals.

Local companies are preferred for improving infrastructure such as the construction of bridges, highways and plants. This is evidenced by their involvement in such projects. Although foreign experts can provide recommendations, Azerbaijan's leadership in business environment reforms

according to the World Bank's "Doing Business 2009" report is a good indication of its progress. In just two years, the country improved from 96th place to 33rd place in terms of business environment.

Thanks to reforms aimed at enhancing the business environment, there have been notable advancements in safeguarding investors' benefits, as evidenced by Azerbaijan's 18th ranking in "Doing Business 2009." This marks a significant improvement compared to our prior position of 107th in the previous year's report, thus assuaging concerns about the reduction of foreign investments.

The world economy slowdown continues, and every country and company is now focused on internal security. Azerbaijan should adopt a similar strategy and carefully distribute its investment among economic sectors, rather than just focusing on the amount of investment. Certain areas may require the denial of foreign investment. This process will persist.

Despite the government having ample financial resources, the Transport sector still relies on funding from international financial institutions. An instance is the $1.4 billion credit provided by WB, ADB, EBRD, and European Investment Bank until 2012 to enhance the country's railway system. However, we believe that there should be a reduction in money flow from international financial organizations in the future. This is because our currency resources have surpassed $10 billion, rendering foreign investments unnecessary.