Challenges And Opportunities Of Azerbaijan’s Non-Oil Sector – OpEd

In the years of independence, the oil industry has played a great role in the economic development of the Republic of Azerbaijan. The state budget has been enlarged significantly at the expense of revenues gained due to rapid development of oil sector.

The development of oil industry has created great potential for non-oil sector and economic development in the country’s regions. Since 2003, a number of state projects on non-oil sector of economy, including service sector, transport, social infrastructure and tourism, have been realized in these regions. However, many measures are to be conducted further to provide sustainable economic development as well as eliminate the sharp differences between the region of capital city and peripheral regions in terms of development.

The development of non-oil sector is an integral part of “Azerbaijan 2020: view to the future”, signed by President of Azerbaijan in December 29, 2012. As shown in this goal, in order to develop non-oil sector, the use of natural and economic resources as well as its efficiency must be expanded.

According to various expert estimates, the Azerbaijan’s current non-oil sector development has already led to the progress and growth of the Azerbaijan’s economy in the whole. In this regard, S&P Global Ratings notes that by the end 2017 the nominal value of Azerbaijan’s GDP will be $40 billion with 1 percent decline.

The agency claims that in 2017-2020 the trade surplus in Azerbaijan will show positive balance. In particular, by the end 2017 the positive balance will be 12.3 percent of GDP, 2018 — 12.7 percent of GDP, 2019 — 14.3 percent of GDP, 2020 — 14.8 percent of GDP.
These numbers are worth paying attention to. It is obvious that the non-oil sector development is connected with the opportunity to realize products, so to say, to expand export market.

Azerbaijan has the largest agricultural basin in the region. In this case it is high time to consider available prospects of expanding fruit and vegetable export.

Currently 90 percent of the export of agricultural output goes to Russia. According to the State Statistics Committee, in 2016 the Azerbaijan’s export to Russia comprised $409 million. So this country forms the basis of the Azerbaijan’s fruit and vegetable market. However, at the present Azerbaijan takes only the 11th place among the top Russian agricultural production importers. It’s logical that these high indexes of goods turnover can be increased. Taking into account that the Russian market is considered to be boundless, there are real prospects to build up export and correspondingly strengthen non-oil sector. Therefore the trade cooperation development should stay among the top priorities in the bilateral dialogue.

On the whole, Azerbaijan has great potential for the development of non-oil industry in the future. Its regions are rich in natural potential for development, including mineral resources, attractive landscapes and mineral water resources of tourism significance as well as fertile soil cover and usable territories.


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