The Importance of Natural Resources for The Azerbaijani Economy

Abstract

Azerbaijan’s natural resources attract the transnational corporations from the developed world and increase investment projects in oil industry. The development of the petroleum industry has significantly increased the GDP of the country since 1994. The paper will focus on natural resource contracts. Their impact on GDP growth, oil industry, and regional economic integration will be described through two important contracts. While all assistance is welcome from oil corporations, the paper claims that the Azerbaijani Government must consider disadvantages of oil and gas exploration projects, because the negative results can impede upon the country’s economic development in a long run. Descriptive explanatory discussion method is used in this research paper by referring to the information from works of scientists and organizations. The goal of this paper is to show that Azerbaijan currently benefits from investments of oil corporations, but may suffer negative consequences in a long run as observed in other oil-rich, post-Soviet countries. There is a suggestion that it may be possible to predict those problems and make new efforts in order to prevent the state from facing economic stagnation in the future.

Keywords

• Azerbaijan
• Oil industry
• Contracts
• Corporations
• Investment

References

1. Abbasov, S. (2014). Azerbaijan may Benefit from the Russia-Ukraine Crisis. EurasiaNet. https://eurasianet.org/azerbaijan-may-benefit-from-the-russia-ukraine-crisis ADB (2021). Poverty Azerbaijan. https://www.adb.org/countries/azerbaijan/poverty#:~:text=Poverty%20Data%3A%20Azerbaijan,force%20in%202019%20is%20unemployed
2. Auty, R. M. (1993). Sustaining Development in Mineral Economies. Routledge.
3. Bannon, I., & Collier P. (2003). Natural Resources and Violent Conflict; Options and Actions. World Bank.
4. Barma, N. H., Kaiser K., Minh Le T., & Vinuela, L. (2011). Rents to riches? The political economy of natural resource-led development (English) (pp. 1-10). World Bank.
5. Bohr, A. (2016). Turkmenistan: Power, Politics and Petro-Authoritarianism. The Royal Institute of International Affairs Chatham House. https://www.chathamhouse.org/sites/default/files/publications/research/2016-03-08-turkmenistan-bohr.pdf
6. CBAR (2021). Central Bank of Azerbaijan Homepage. Retrieved from https://www.cbar.az/
7. Chene, M. (2013). Overview of Corruption and Anti-Corruption in Azerbaijan. Transparency International. https://www.transparency.org/files/content/corruptionqas/Country_Profile_Azerbaijan_2017.pdf
8. De Waal, T. (2013). What Lies Ahead for Azerbaijan?. Carnegie Endowment for International Peace. https://carnegieendowment.org/2013/10/07/what-lies-ahead-for-azerbaijan/gpd3.

9. En.president.az (2021). Official Web-Site of President of Azerbaijan Republic - NEWS » Speeches » Speech by Ilham Aliyev at the Signing Ceremony of the Final Investment Decision on Shah Deniz-2. http://en.president.az/articles/10568
10. Esanov, A., Raiser, M., & Buiter, W. (2001). Nature’s Blessing or Nature’s Curse: The Political Economy of Transition in Resource-Based Economies. European Bank for Reconstruction and Development.
11. Hasanov, H., & Bahramov, J. (2018). The Pivotal Role of Azerbaijan Oil and Baku. Branobelhistory.com. http://www.branobelhistory.com/themes/society/the-pivotal-role-of-azerbaijan-oil-and-baku/
12. Humphreys, M., Sachs J., & Stiglitz, J. (2007). Escaping the Resource Curse (1st ed). Columbia University Press.
13. Ibadoglu, G. (2008). Contract of the Century: Myths and Realities. Transition Studies Review, 15, 425–430.
14. IMF (2021). IMF -- International Monetary Fund Home Page. https://www.imf.org/en/Home
15. Jaffe, A. M. (1998). Unlocking the Assets: Energy and the Future of Central Asia and Caucasus. (1st ed.) (p. 23). Rice University.
16. Jones, L. P., & Weinthal, E. (1999). Prelude to the Resource Curse: Oil and Gas Development Strategies in Central Asia and Beyond. Yale University.
17. Kazimov, V. (1999). Azerbaijan's Economic Development Trends in Globalization: Azerbaijan Model of National Economic Development. Science. Translated from: V.Ə.Kazımov. (1999). Qloballaşma şəraitində Azərbaycan iqtisadiyyatının inkişaf tendensiyaları. ‘Milli iqtisadi inkişafın Azərbaycan modeli’. Elm.
18. Kochladze, M., Gujaraidze, N., Gujaraidze, K., & Titvinidze, V. (2005). BTC Pipeline – An IFI Recipe for Increasing Poverty. CEE Bankwatch Network. http://bankwatch.org/sites/default/files/report_btc_poverty_10_05.pdf
19. Narimanov, A A, & Palaz, I. (1995) Oil history, potential converge in Azerbaijan. Oil and Gas Journal, 93( 21).
20. Olcott, M. B. (1998). Central Asia: Confronting Independence. Rice University.
21. Rosenberg, C., & Saavalainen, T. (1998). How to Deal with Azerbaijani Oil Boom? Policy Strategies a Resource-Rich Transition Economy. IMF Working Paper, 98(6).
22. Ross, M. L. (2012). The Oil Curse. How Petroleum Wealth Shapes the Development of Nations. Princeton University Press.
23. Savin, V., and Cherng-Shin, O. (2013). Analysis of Post-Soviet Central Asia’s Oil and Gas Pipeline Issues. Geopolitika.ru. https://www.geopolitica.ru/en/article/analysis-post-soviet-central-asias-oil-gas-pipeline-issues.
24. Snow, N. (2013). Pieces Moving into Place for Azerbaijan-to-Europe Gas Pipeline. Oil&Gas Journal. http://www.ogj.com/articles/2013/09/pieces-moving-into-place-for-azerbaijan-to-europe-gas-pipeline.html
25. State Statistical Committee of the Republic of Azerbaijan (2021). https://www.stat.gov.az/
26. TANAP (2021). Trans Anatolian Pipeline. http://www.tanap.com/
27. TAP (2021). Trans Adriatic Pipeline. https://www.tap-ag.com/
28. USEIA (2013). Azerbaijan. https://www.connaissancedesenergies.org/sites/default/files/pdf-pt-vue/eia_analysis_report_on_azerbaijan.pdf
29. Van der Ploeg, F. (2011). Curse or Blessing?. Journal of Economic Literature, 49(2), 366-420.
30. World Bank (2021). Azerbaijan. https://www.worldbank.org/en/country/azerbaijan