This paper evaluates the financial policy of oil-exporting Azerbaijan in the recent oil boom and bust period. Analysis of fiscal policy evaluates the fiscal sustainability and efficiency of government spending to upgrade domestic economy. Monetary policy evaluation measures the effect of the exchange rate policy on competitiveness of non-oil economy and capacity of Azerbaijan government to sustain macroeconomic stability in the oil-shock period. The share of the oil revenue in government budget increased significantly, and budget spending is directed to physical investment while investment in human capital in the form of health, education and social spending lagged behind. Aside from currency crises in 2015, macroeconomic stability has been under control, but fixed exchange rate policy impeded the competitiveness of non-oil sector and caused Dutch disease.

The Small and Medium-Sized Enterprises (SMEs) are a necessary element of the social and economic development of the national economy from the perspective of their significant contribution to employment, innovative capacity, and flexibility. Innovative SMEs are necessary building block in the restructuring of transition economies. The successful reformers of the Central and Eastern Europe countries can promote policies conducive to the development of innovative SMEs, and consequently benefit from the economic advantages of SMEs. However, the majority of the Commonwealth of Independent States (CIS) countries are lagging behind significantly. This paper gives the analytical description of the development of SMEs in post-socialist countries during the transition process within the framework of the market reforms. The main barriers to growth of SMEs with innovation capacity are the institutional environment, and the inadequate attitude of the government towards small companies. The countries which integrated to European Union been able to overcome these barriers considerably, while the CIS countries do not have a record of significant achievement in this area.