“Russkii Vopros” published Vugar Bayramov’s research article

The diversification need of Azerbaijan’s economy has long been debated since 2005, when the oil revenues fuelled economy’s development on one-engine shadowing non-oil sector. As many authors cite harmful effects of economic concentration, even more arguments are provided for negative consequents of concentration on natural resources, especially on abundant, but non-renewable energy sources. These negative effects (I) for society are (1) resources course, (2) delayed modernisation and (3) entranced inequality, (II) for economy are (1) low profitability, (2) less perspectives for future growth, (3) and underdeveloped economic sectors.

First of all from the very concentrated economy society suffers because of resources curse. Resources curse implies that, paradoxically, nations with plentiful natural resources are the ones suffering from low economic growth: ideally they could use their resources for their development. This is result of many factors as, including but not limited to, mismanagement, weak institutions, and/or lack of knowledge. When the growth sourced from single source the society suffers from the delayed modernisation, as well: the elite controlling revenue source try to prevent economic diversification with the purpose of preventing emergence of alternative powers and sources. Thus society suffers from underdeveloped economic and social situation. However this is not the last perk of concentration. Society also suffers from entrenched inequality: elite controlling revenue sources lead society to gap among social strata. Wealth people get wealthier, while others poorer.

Azerbaijan economy could be classified into oil and non-oil sector, because of their shares. Although until the early 2000s the non-oil sectors were weighted more in economy, since 2005 the oil sector took the leading position. The first burdens of this one-engine growth came during 2007 – 2009 crises, when oil prices did drop to USD 36 from USD 100. This made the government rethink about economic diversification. Up to 2012 the energy sectors share in the economy was higher than cumulative total for all non-oil sectors. Thus, fostering the development of non-oil sector in Azerbaijan is matter of utmost importance. For Azerbaijan’s strategy through 2020 entitled ‘’Look into the future’’ is the diversification as top goal for economic development. However, the occured problem is about deciding what sectors other than oil sector are more profitable and should be prioritized.

The economic diversification is the one of the most important goals in the economy of all developing countries even including well-developed countries as well in order to get sustain on economic growth. The aim of this paper is assessing the diversification of economy and competitiveness among the sectors in the domestic economy of Azerbaijan. Hereby, the researchers will try to find out the answers to the questions according below :

To what extent Azerbaijan’s economy is diversified?
Are the sectorial monetary and fiscal policies successful in development?
Do government’s policies generate competitiveness in the sector?
How the future growth in different sectors could be achieved?

Throughout the article, these questions are not analysed for regional diversification but sectorial diversification. And to quantify the sectorial diversification researchers, have calculated ‘’Ogive index’’ for the GDP in sectors. It is worth of mentioning, for sectorial employment diversification the Herfindahl-Hirschman Index has been employed. Ogive index was introduced by Tress in 1938. Then other economists, such as Hackbart and Anderson (1975), Attaran and Zwick (1987) applied this method to measure the diversity in economy of different countries.

Full article is available at;

Leave A Comment