Strengthening Functional Urban Regions in Azerbaijan: National Urban Assessment 2017 by Asian Development Bank

Author:Asian Development Bank [Bank, Asian Development]
Language: eng
Format: epub
Tags: Public Policy, City Planning & Urban Development, Strategic Planning, Political Science, Business & Economics
ISBN: 9789292613792
Google: dlmGDwAAQBAJ
Publisher: Asian Development Bank
Published: 2018-12-01T14:08:37+00:00

2.8.5 Economic Diversification Prospects and Policies

Before the current oil price crisis, in April 2012, the State Statistical Committee and the State Oil Company of Azerbaijan Republic announced the government’s intention to prolong the duration of oil production and reserves by reducing extraction rates. It is evident from the above analysis that lower production levels or, currently, lower oil prices in the near future, will reduce oil revenues, restrain economic growth, and adversely affect government revenue and expenditures. ADB’s CPS also expects that growth rates will be more modest over the medium term.

Thus, the drivers of growth will continue to move away from the oil sector toward the non-oil economy and, in a slower growth environment, it will be necessary to identify areas where rapid and sustainable employment generation is possible. However, non-oil economic growth will continue to be driven by public sector investments, which are, in turn, then threatened by the decline in oil revenues. For the development of the urban sector, the important economic issues include the following:

• There is a sustainability challenge in managing oil resources and revenues for future generations, while spending on the infrastructure needed to support diversification of the economy that would enable long-term, sustainable economic development.

• The government’s current levels of annual increases in public expenditures rely on significant transfers from SOFAZ to the state budget. Given these limitations, the government will need to maintain macroeconomic and fiscal stability by moderating its expenditures in the short and medium term, and increasingly using SOFAZ transfers to finance large-scale projects to help reduce transfers in the long term.

• In trade, foreign direct investment, and macroeconomic policies, there is a need to maintain fiscal prudence and quality in public spending in line with the capacity of Azerbaijan to utilize funds efficiently and the capacity of the economy to absorb foreign exchange.

• Progress in economic diversification will depend on a variety of policy measures such as targeting sectors with high employment potential, removing barriers to entry, expanding and improving education and technical vocational and education training, improving accessibility and urban service infrastructure, and introducing measures to improve productivity.

• Creating a competitive non-oil economy will require economic changes in institutional arrangements including regulations and governance, and the capacity of public institutions.

• Social and economic policy reform is underway on health and primary education, but other areas such as financial markets, technology, goods markets, and higher education require more profound reforms.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.