Oil and Gas Revenue Management in Azerbaijan

Ibadoghlu, Gubad; Alasgarov, Kamil; Bayramov, Galib

doi:10.2139/ssrn.3104106

Cited by 23 publications

(6 citation statements)

References 1 publication

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“…The main international trade indicators of Azerbaijan are highly cyclical concerning the oil prices (Niftiyev and Namazova 2020) that put the Azerbaijan economy in a dependent situation against oil production and oil prices (Humbatova et al 2019). The cyclical nature of the national economy, together with the volatile oil revenue creates troubling conditions for non-oil sectors as they are highly dependent on state support (Ibadoghlu et al 2013). In fact, agricultural sectors are heavily subsidized based on the size of the cultivated land (Sadigov 2018) which is a common picture among the resource-rich, Dutch disease countries where non-resource sectors fail to exhibit longterm sustainable growth and development (Karl 1997).…”

Section: How To Conceptualize the Azerbaijan Economy? Dutch Disease P...mentioning

confidence: 99%

Dutch Disease Perspective on Vegetable Exports in the Azerbaijan Economy

CZECH,

NIFTIYEV

2020

JAES

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Agriculture or agrarian sectors together with non-resource manufacturing can be the key drivers of non-mineral development among natural resource-rich countries. However, agricultural development lags behind the extractive industry which puts a big share of the labor force into an uncertain position and creates food security risks. In Azerbaijan, which is an oil-rich post-soviet country, details focus on individual exports like vegetable exports that have not been carried out against specific economic indicators such as the Extractives Dependence Index (EDI), the Real Effective Exchange Rate (REER), etc. This paper is based on one-way variance analysis (ANOVA) and Tukey’s honest significance test (Tukey’s HSD test), as well as the Granger causality test. Our analysis shows that Azerbaijan’s dependency on natural resources (measured by the EDI) has a significant effect on the value of vegetable exports. Moreover, the Granger causality test revealed a one-side causal relationship from the REER and production costs to the vegetable exports, at a 10% significance level. Similarly, a unidirectional Granger causal relationship from crude oil prices to the REER, at a 1% significance level was found. Thus, our findings indicate that overall Dutch disease affects the Azerbaijan economy towards vegetable exports. 

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Section: How To Conceptualize the Azerbaijan Economy? Dutch Disease P...mentioning

confidence: 99%

Dutch Disease Perspective on Vegetable Exports in the Azerbaijan Economy

CZECH,

NIFTIYEV

2020

JAES

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“…When oil production starts declining and/or global oil prices drop, either the government will be forced to run a budget deficit or draw more funds out of SOFAZ. These options are unsustainable and they could lead to a debt crisis, which would lead to high costs and lower standard of living for future generations, or a return to pre-oil levels of development and poverty (Ibadoglu et al, 2013).…”

Section: The Role Of Sofaz In Fiscal Sustainabilitymentioning

confidence: 99%

Fiscal sustainability and the State Oil Fund in Azerbaijan

Aslanli¹

2015

Journal of Eurasian Studies

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Azerbaijan, like many resource-rich countries, decided to set up a sovereign wealth fund in order to avoid income volatility, to achieve intergenerational equity and to transform resource wealth into more productive assets. Azerbaijan established the State Oil Fund of the Azerbaijan Republic (SOFAZ) in late 1999 to accumulate income from hydrocarbon exports. SOFAZ has gradually become the leading part of the country's public finance system. Azerbaijan was the first country to fulfill all requirements of the Extractive Industries Transparency Initiative (EITI), an international agreement to implement global standards of transparency in the resource extracting sectors. However, SOFAZ's contribution to an effective resource revenue management and long-run economic development is still questionable: transparency applies only to the income side of Azerbaijan's oil fund while the expenditure side remains opaque. Unlimited and unconditional transfers from SOFAZ to the state budget have threatened fiscal sustainability and the overall macroeconomic equilibrium.

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“…There is a growing opinion that the 'more for more' principle has limited, if any, application to Azerbaijan. First, at its peak in 2011, the daily income from Azerbaijan's oil revenues was $55 million (Ibadoglu et al 2013), which made EU aid rather an insufficient incentive for reform. The phenomenon of resource nationalism and the growing self-confidence of the Azerbaijani elite, especially after the major inflow of oil revenues began in 2005 via the Baku-Tbilisi-Ceyhan pipeline, undermined both the drive for reform and, consequently, the passion to integrate.…”

Section: Resource Abundance and The Eu Conditionality Principlementioning

confidence: 99%

Azerbaijan and the impact of the lack of democratisation on relations with the EU

Alieva

2014

European View

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In 2009 Azerbaijan joined the EU's Eastern Partnership (EaP) programme, officially confirming its devotion to the once-preferred strategic foreign-policy course-that of integration with European and Euro-Atlantic structures. However, Azerbaijan's official interest in such integration has since waned, which is reflected in the country's near-last-place position in signing the EaP agreements. In 2014, of all the areas involved, Azerbaijan has so far only signed the visa facilitation and readmission agreements. On key interests only one appears to be mutual in practice-that of energy security. Of all EaP countries, Azerbaijan appeared to be the most capable of resisting various Russian pressures by avoiding policies provoking its powerful northern neighbour, while at the same time balancing interests and playing a strategic role in the area of EU energy security. However, this political avoidance and balancing act has been reached at the expense of increasing deviation from its key strategic path and identity as laid down by the founders of the modern nation state of Azerbaijan, resulting in a change in the nature of relations with the EU.

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Oil and Gas Revenue Management in Azerbaijan

Cited by 23 publications

References 1 publication

Dutch Disease Perspective on Vegetable Exports in the Azerbaijan Economy

Dutch Disease Perspective on Vegetable Exports in the Azerbaijan Economy

Fiscal sustainability and the State Oil Fund in Azerbaijan

Azerbaijan and the impact of the lack of democratisation on relations with the EU

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