The government should implement very serious reforms to achieve its goals

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Question: Farid Bey, the head of the country, signed an order on the approval of the "Strategy of Socio-Economic Development of the Republic of Azerbaijan in 2022-2026". What are the main goals set in this strategy?

Answer: The document reflects the vision of the government and the goals it wants to achieve in the next 10 years. Traditionally, economic goals such as reducing the dependence of the country's economy on resource income, i.e. achieving sustainable economic development, increasing the export of non-oil products, improving the business environment, attracting investments to the country, and improving macroeconomic indicators have been mentioned in the development strategy. In addition to the economy, the direction such as restoration of liberated areas and return to those areas, increasing the level of education in the country, development and wider application of information technologies, protection of the environment, and increasing productivity in the agricultural field are seen in the foreground in the document.

Question: Do you think it will be possible to implement the strategy in reality?

Answer: The development strategy announced by the government has defined very ambitious goals that it plans to achieve by 2026, as well as by 2030. I think that in addition to the internal problems of Azerbaijan's economy, the current state of the global economy is also among the factors that make it difficult for a country to make a big leap in a short period of time. It should be taken into account that there are serious challenges in the global economy, especially since the pandemic. In the last two years, historical inflation records of countries have been broken. The national currency of many countries, including those located in the same region as Azerbaijan, is experiencing difficult times, etc. The sanctions imposed on the Russian economy after Russia's attack on Ukraine, the West's energy dependence on Russia, and similar issues make the situation even more difficult. For a long time now, some economic organizations and think tanks have been warning that the world economy may experience a global economic crisis. From this point of view, how the world economy will be in the coming years will affect whether the Azerbaijani government will be able to reach the goals set. Because Azerbaijan is also a part of the global economy, the events happening there, of course, also affect Azerbaijan.

As I mentioned, what we are talking about are external factors that affect the achievement of the goals envisaged in the strategy. But of course, in addition to external factors, there are also factors directly dependent on the government itself. From this point of view, I think that in order to realize the goals envisaged in the "Strategy of Socio-Economic Development of the Republic of Azerbaijan in 2022-2026", the government should implement very serious reforms. However, it is not about replacing some personnel or canceling or merging some institutions. For sustainable economic development, first of all, the approach to management should be changed. In particular, ensuring accountability and transparency of government activities, increasing participation in decision-making, and ensuring the rule of law are very important factors. In order to make these changes, it is necessary to make serious changes both politically and economically. In this regard, the achievement of sustainable development and other goals mentioned in the development strategy will depend on whether these steps will be taken or not.

Question: What problems must be overcome to achieve these goals?

Answer: From an economic point of view, I think that the most important thing is to develop the country's business environment. It is especially important to prevent official entrepreneurship, to prevent the use of administrative resources for economic interests, to facilitate the entry of foreign capital into the country, and to effectively organize tax and customs policy. Because if they are done, both the entry of investments into the country becomes easier and the opportunities for export expand. As a result, the country's economy gets more income. At the same time, factors such as the increase in the number of jobs as a result of the revival of economic activity and the normal level of the price of products and services in the competitive environment naturally increase the social well-being of the population. In this regard, it is very important to create equal opportunities for everyone in the country's economy. Another important factor from the economic point of view is to have an economy that creates added value and has innovations.

However, economic policy is no longer enough to achieve economic development in modern times. For a long time now, the provision of sustainable economic development also depends on the efficient operation of other institutions. In this regard, we can especially mention the provision of the rule of law and judicial independence. Because, if property rights are not protected, there can be no sustainable economic development. On the other hand, for the production of products that create added value, we need a free business environment as well as qualified personnel. In this regard, one of the most important links of the process is related to the improvement of the education quality of the country.

As we mentioned, it is no longer enough to make economic decisions for socio-economic development. From this point of view, one important direction is to increase the possibilities of monitoring the activities of government bodies. In order to ensure this, it is very important to expand political participation and increase the capacity of the media and civil society. After creating this environment, we can create a suitable environment for sustainable socio-economic development.

Question: What are the strategies for socio-economic development so far and what is the status of their implementation?

Answer: Especially after the devaluations in 2015, documents of this type began to appear in connection with the development of many fields in Azerbaijan. However, one of the most memorable documents on socio-economic development was the development concept "Azerbaijan 2020: Look into the Future" adopted in 2012. Moreover, it is easier to evaluate this document because the government has defined specific measurable goals there, as in the last strategic development document it adopted. In some cases, such specific goals are not defined in the development documents adopted in Azerbaijan. It is this factor that allows the institutions responsible for the implementation of that document to manipulate the results of the activity.

However, let's also note that the results of the development concept "Azerbaijan 2020: Look into the Future" that we mentioned cannot be considered very successful. For example, it was mentioned that during the implementation period of the concept, GDP per capita in the country would be 13 thousand dollars. However, in reality, this figure did not even reach half of the target. Regarding non-oil exports, there are the same results. As a result of the implementation of the strategy, the government aimed to make $ 1,000 non-oil revenue per person in the country. However, even last year this indicator was less than $ 300. It is true that the devaluations in 2015 also caused the real results to be so far from the goals because the development concept was prepared before the devaluation, but in any case, the occurrence of devaluations was also the result of the fact that the country's economy had not been able to free itself from oil dependence for many years, from which the government is directly responsible. Another target mentioned in the development concept "Azerbaijan 2020: Look into the Future" was related to raising the minimum wage to 60 percent of the average monthly wage. Currently, the average monthly wage in the country is 825 manats, and the minimum wage is 300 manats. That is, despite the promise of 60 percent, this rate is only 36 percent.

Question: The President also signed an order to amend Order No. 2469 of the President of the Republic of Azerbaijan dated February 2, 2021, on the Approval of "Azerbaijan 2030: National Priorities for Socio-Economic Development". In your opinion, what are the national priorities and what issues should be changed?

Answer: Sustainably growing competitive economy, dynamic, inclusive, and socially just society, competitive human capital and modern innovations, return to liberated territories, clean environment and "green growth" are the main national priorities identified until 2030. The government wants to achieve a high welfare society by achieving these priorities. This is quite an ambitious goal. From this point of view, I think that what steps are taken to achieve these goals is more important than which directions are among the priorities. Therefore, it is very important to implement the necessary changes above to achieve sustainable socio-economic development. Because, the use of alternative energy is increasing in the world, and in the coming years, it will be even more difficult for countries that build their economy solely on the basis of resource income to stay afloat. In the first six months of 2022, 92 percent of the country's exports consist of oil and gas products. Therefore, in 2030 and beyond, in order for the level of well-being of Azerbaijani citizens to be normal and the country's economy to stay afloat, the country's economy must necessarily be ready for modern trends - innovation. For this, it is very important to take steps that will create conditions for the development of human capital, along with a favorable business environment and functioning institutions in the country.