Economic Development Models in Azerbaijan
The principle of Permanent Oil Incomes is reflected in the “strategy of long-term use of oil incomes” adopted by President Ilham Aliyev of the Azerbaijan Republic in 2004. Nevertheless, the socioeconomic modeling based on this principle has not been designed yet. It still remains an issue to rationalize the proportion of oil-gas incomes estimated at 400 billion US dollars for consumption and saving purposes across years. What emerges as a result is that supply and demand do not balance each other. Along with the stable economic development and macro-level stability, there still exists “Twin deficits” problem in Azerbaijan.
On the one hand, non-oil foreign trade deficit has been swelling, which means that certain portion of oil incomes are indirectly spent on covering the deficit of non-oil foreign trade deficit and financing foreign goods and services. In its turn, it slows down the competitiveness potential of the domestic economy.
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