After restoration of independence in 1991, the Republic of Azerbaijan began to realize its sovereign rights in economic field and to implement independent policy. The main directions of this policy are organization of the economic system based on different types of property, transition to market economy and integration into the global economy.

Economically, the years after the independence can be divided into two main periods. The period of 1991-1995 was characterized by economic chaos and regression. The period after 1996 is known for an increase in macroeconomic stability and dynamic economic development.

The situation during the first period was strongly aggravated by political (unstable political situation during 1991-1993), military (20% of the territory of Azerbaijan was and still is under the occupation of Armenian military forces as a result of Armenia's military aggression against Azerbaijan) and economic (the breakup of mutual cooperation ties and economic relations that were formed over decades between the former Soviet states) problems faced by the Republic of Azerbaijan.

The legalization of economic reforms was also reflected in adoption of the State Programme "On Business Development in Azerbaijan (1993-1995)" in 1993.

Within a short historical period after the independence and even in spite of the unfavorable starting conditions, significant results were achieved in the fields of socio-economic development and integration into the world economic system as the result of far-sighted policy and intensive activities of the late President of Azerbaijan, the national leader Heydar Aliyev.

The oil contract signed with the oil companies of the West in Gulistan palace of Baku on September 20, 1994 opened a new page in the history of the country. Later, the mentioned contract called the contract of the century was perpetuated in the oil chronicle of independent Azerbaijan.

The signing and implementation of the contract famous as the Contract of Century in the entire world is the brilliant demonstration of the realization of oil strategy constituting the concept of the economic development of independent Azerbaijan and worked out by the prominent politician Heydar Aliyev.

One more significant event took place in the life of the Azerbaijani people on April 17, 1999. The Supsa export terminal on the Black Sea shore of Georgia and oil pipeline Baku Supsa were commissioned with participation of the President of the Republic of Azerbaijan Heydar Aliyev, the President of Georgia Edward Shevardnadze and the President of Ukraine Leonid Kuchma. The Chyrag oil started to be transported to the global markets from Supsa port, thus opening the new western direction of the transportation of Azerbaijani oil.

The establishment of the State Oil Fund in the year 1999 heralded the beginning of a new stage in the economic development of Azerbaijan. Only in 2009 63 health centers, 87 education centers and 7 Olympic Sport Centers were constructed and repaired. 6 new school buildings for 1600 pupils were constructed by financial support of Heydar Aliyev Foundation.

As the result of radical changes in the national economy, the period from 1995 to 2008 saw serious successes in the field of industry. The conclusion of production sharing agreements on September 20, 1994 on oil and gas fields with large foreign companies encouraged rapid development of oil and gas industry. It should be noted that processing industry was developing along with the production. Azerbaijan began to manufacture cash registers, micro calculators, telephones, consumer electronics, plastic doors and windowpanes, oil pipes and other products. The manufacturing of numerous products, which were previously imported from foreign countries, in Azerbaijan allowed expanding the range and availability of products and eliminating the dependence on exportation.

This encouraged business activities and development of small businesses in Azerbaijan. The ‘open door’ policy of the national government resulted in raise of the number of foreign and joint enterprises in 3 times. Nearly 200 enterprises with foreign investments from 63 countries are currently operating in Azerbaijan and thousands of new workplaces were opened.

During 2004-2009 foreign trade increased 2.8 times, of which export 3.9 times, import 1.7 times, non-oil export 2.4 times. In 2009 both revenues and expenditures of government budget rose 7 times compared to 2004, during this period 32886 new enterprises were established, 840 thousands new jobs were created. As the result of comprehensive measures, poverty was reduced for 4.1 times, as from 44.7% to 11% for the last 5 years.

Fundamental changes happened in social and field contents of agriculture. In place of big economic forms numerous economic subjects were created, form of public property on lands suitable for agriculture, cattle, production and non-production objects, agricultural equipment replaced with individual (personal) property upon the privatization policy.

The number of agricultural producers is 1.208,7 thousand units, 99,98% of which is comprised of private and 0,02% public farms. In addition, there are 78.648 cottage farms dealing with production, processing and sale of agricultural products. 66,8% of specialized agricultural producers are consisted of family-villager, 32,8% housekeeping, 0,2% farming.

The success of Azerbaijan was reflected in the reports of international organizations. Moreover, Azerbaijan is ranked 51 in the Global Competitiveness Report for 2009-2010, which is above other CIS countries. Furthermore, even in the current economic situation Standard & Poor’s increased the Azerbaijani rating’s forecast from “stable” to “positive”.

The dynamics of economic growth, which gained a new impulse through the comprehensive extraction and export of natural resources and economic growth in Azerbaijan even during the 2009 global economic crisis, show that the strategic line that was chosen was being conducted successfully.

Government implements "open door" policy to allure investments to the economy of the country. Currently, Azerbaijan government takes measures to continue economic reforms, to improve business climate, to increase non-oil sector along with oil sector. The President of Azerbaijan Republic issued the Order on "Ensuring measures of organization of entrepreneurship subjects' activity on "single window" principle" dated October 25, 2007, for taking necessary measures to accelerate development of entrepreneurship, to simplify starting procedures of business and to increase suitableness of business climate. Pursuant to the Order, the Ministry of Taxes of Azerbaijan Republic was appointed as single state registration body on "one window" principle and the application of this system was started on January 1, 2008. After applying "one window" system, entrepreneurs desiring to register their businesses required number of procedures has been reduced from 15 to 1 and time for this reduced from 30 days to 3.

Azerbaijan is a country with growing economy. Azerbaijan's gross domestic product (GDP) increased by 5.8% and reached AZN 57.7 billion in 2013. Volume of GDP on per capita of population was formed 6207.3 manats (7912.5 US dollars). In 2013, total non-oil sectors dynamics grew 10.0% in real terms (in 2012: 9.7%). So, 10.7% growth was recorded in communication, 6.3% in transport, 23.0% in construction, 4.9% in agriculture and 9.9% in trade in 2013 compared to 2012.

 Investment in the amount of AZN 17872.1 million was directed into the fixed capital from all financing sources into development of economic and social sectors of country that exceeds last year by 15.1%. 76.7% of the total directed investment to the fixed capital fall at domestic investments and 23.3% at foreign investments.

Investments worth 13047.3 million AZN (73.0%) - were made into non-oil sector, and AZN 4824.8 million (27.0%) - into oil sector in 2013.
The volume of credit recourses allocated by banks was AZN 15245.3 million that increased by 30.0% for the 1st of December, 2013. A wide range of goods worth AZN 19655.9 million was sold to population and paid services worth AZN 6527.3 million were rendered in 2013.

According to the State Customs Committee of Azerbaijan Republic, during January-June of 2014, foreign trade turnover was 15.370.92 million US dollars, including import 4.124.62 million U.S. $, export 11.246.30 million U.S. $. During this period Azerbaijan mutually cooperated with 134 countries and foreign trade balance was accounted positive 7.121.68 million U.S. $.

The state is playing an important role in the formation of quite new economic model for the development of the region and the energy potential of the Caspian Sea, the expansion of political and trade relations between Europe and Asia, the development of the Caucasus transport regions and the implementation of such great projects as TRASECA.

Dominant tasks of next stage will be sustaining of macroeconomic stability and economic growth. Within these purposes, provision of qualifying economic growth is priority. Aiming to these tasks, expanding of diversification of the economy, government wants to minimize dependence from oil sector, to transit to innovative economy, promote intensive production in agriculture, developing of economy in clusters. Moreover, comprehensive measure will go on in order to strength energy, food and ecological security.

Increase of social and economic welfare of population remains the main direction and priority of social-economic policy for the coming years.

Azerbaijan in International Reports

According to "the Global Competitiveness Report" of World Economic Forum, Azerbaijan ranks 46th among 144 countries and has been first in the CIS for four consecutive years.

 In the Global Energy Architecture Performance Index Report Azerbaijan ranks 42nd out of 105 countries.

 "Standard and Poor's" International Rating Agency raised long-term sovereign credit rating of Azerbaijan by one level to "BBB-", while keeping the rating outlook "sustainable".

 Moody's" International Rating Agency upgraded Azerbaijan's long-term credit rating to "Baa3" from "Ba 1", while keeping rating outlook "sustainable" in April, 2012.

"Fitch Ratings" Agency gave a grade of "BBB-" in investment for Azerbaijan's long-term rating for domestic and foreign currencies, changing its prognosis from "Stable" to "Positive".

According to the "Human Development Report" of UNDP in 2010, Azerbaijan has advanced into the group of countries with "high human development" from the list of the upper middle-income countries.

Source:                www.azerbaijan.az