Developed Country Status: Azerbaijan's Progress And Challenges

Azerbaijan is a small, landlocked country in the Caucasus region, straddling Europe and Asia. It has a population of over 10 million people, the majority of whom are ethnic Azerbaijanis. Azerbaijan is considered a developing country by the International Monetary Fund (IMF) due to its lower economic performance, but it is also considered an upper-middle-income country with a high level of economic development and literacy. The country's economy is heavily dependent on oil and gas exports, with the energy sector making up two-thirds of its GDP. While Azerbaijan has made significant economic progress in recent years, reducing poverty rates and increasing employment, it continues to face challenges in diversifying its industries and improving its human rights record.

Azerbaijan's economy is heavily dependent on oil and gas exports

Azerbaijan's oil and gas exports provide most of its export and government revenue. Oil and gas finance around 60% of the government budget and supply 98% of primary energy and more than 90% of the country's electricity. The country has succeeded in creating a stable upstream oil and gas investment climate and has become a reliable exporter of these resources. The recent completion of the Southern Gas Corridor (SGC), which supplies gas from Azerbaijan's Shah Deniz 2 field to Europe through Turkey, has given the country a new source of gas export revenue.

While oil and gas will remain major sources of wealth for Azerbaijan in the short and medium term, there are concerns about the long-term outlook for this economic model. Oil production has been in decline since 2010, and major oil and gas-importing countries have pledged to reduce greenhouse gas emissions to net zero by 2050, indicating a potential decrease in demand for these resources in the coming decades. The emerging global push for clean energy and the increasing adoption of electric vehicles will also likely affect oil and gas demand.

To address these challenges, Azerbaijan has recognised the need to reduce its economic dependence on oil and gas exports and diversify its economy. The government has drafted proposals for electricity and gas market reforms and plans to increase the efficiency and diversity of domestic energy supply and use. Efforts to modernise and increase oil refining and petrochemical production have been successful, and there is potential for further diversification. Additionally, the country has renewable energy sources, including solar and wind power, that could be developed to reduce its reliance on oil and gas.

In summary, while Azerbaijan's economy is currently heavily dependent on oil and gas exports, there are efforts underway to diversify and address the long-term uncertainties surrounding fossil fuel resources.

Azerbaijan's economy is characterised by corruption and inequality

Azerbaijan is a small, landlocked country north of Iraq, on the Caspian Sea. It is considered a developing country due to its lower economic performance, with an average annual income of $6,680, making it an upper-middle-income nation. Azerbaijan's economy is heavily dependent on oil and gas exports, with gas and oil comprising two-thirds of the country's GDP.

The private sector in Azerbaijan is weak, with the economy dominated by state-owned enterprises. Over half of the formal labour force works for the government. The banking sector is small in relation to the size of the economy. Azerbaijan's economy has historically been dependent on petroleum, which represented 50% of its GDP in 2005 and was projected to double by 2007. While the country has made progress in economic reform since its independence from the Soviet Union in 1991, it has struggled to transition to a market economy, a common issue among former Soviet republics.

The World Bank has warned that while unemployment and poverty rates have fallen, Azerbaijan could lose these gains due to a lack of industry diversification. The country's economic growth has been accompanied by a significant fall in poverty rates, and medium-term growth is projected at 2.5%. However, improving shared prosperity and reducing inequality remain important goals.

Azerbaijan is considered an upper-middle-income nation

Azerbaijan is a small nation located in the Caucasus region, with a population of around 10 million people. It is considered an upper-middle-income country, with an average annual income of $6,680 USD per person. Azerbaijan's economy is heavily based on oil and other energy exports, with gas and oil comprising two-thirds of the country's GDP. The country has made significant progress in reducing poverty over the past two decades, and its economic growth has been accompanied by a substantial decrease in the poverty rate.

Azerbaijan's economy faces challenges due to its high dependence on the energy sector. While the non-hydrocarbon sector has shown growth, with a 6% increase in July, the country needs to diversify its industries to maintain its economic progress. The World Bank has noted that while unemployment and poverty rates have decreased, there is a risk of losing these gains if the country does not address the issue of industry diversification. Additionally, the ongoing conflict with Armenia over the Nagorno-Karabakh region poses an obstacle to economic development and foreign investment.

Azerbaijan's economy is also characterised by corruption and inequality. The country's oil wealth has strengthened the regime of President Ilham Aliyev, and the state has been criticised for its treatment of critics and journalists. However, Azerbaijan has taken steps towards economic reform, and old economic structures are slowly being replaced. The country is also focusing on improving shared prosperity and reducing inequality.

Despite these challenges, Azerbaijan possesses a high level of economic development and literacy. The nation's location at a trading crossroads has contributed to its economic growth, and it has a longstanding tradition of craft art, music, and dance. Azerbaijan's strategic location on international traffic arteries, such as the Silk Road, also highlights the importance of the transportation sector to its economy.

Azerbaijan has a high level of literacy

Azerbaijan is a small country located in the Caucasus region, straddling Europe and Asia. It has a high level of literacy, with a 2023 adult literacy rate of 99.78%. This is a slight decline from 99.8% in 2019, according to UNESCO. Azerbaijan's literacy rate is considered high compared to other countries.

The country has a rich history when it comes to education. In the pre-Soviet era, Azerbaijani education included Islamic religious training that commenced in early childhood. Beginning at roughly age five and sometimes continuing until age twenty, children attended madrasahs, education institutions affiliated with mosques. In the 17th and 18th centuries, madrasahs were established as separate educational institutions in major cities, but the religious component of education remained significant.

During the Soviet era, literacy and average education levels rose dramatically from their very low starting point, despite changes in the script from Arabic to Latin in the 1920s and then to Cyrillic in the 1930s. According to Soviet data, 100% of males and females (ages nine to forty-nine) were literate in 1970.

Since gaining independence in 1991, Azerbaijan has worked on the restoration, improvement, and development of general education. The country has implemented various programmes and projects to reform its educational system, including a joint project with the World Bank called the Second Education Sector Development Project (2009-2016). This project supported the implementation of the general education curriculum and further curriculum reforms to engage teachers, students, and education managers in realising the new curriculum.

Azerbaijan's education system is regulated by the Ministry of Education. Education is free and compulsory for children between the ages of six and fifteen. The main language of instruction is Azerbaijani, but there are many schools that offer all levels of education in Russian as well. Additionally, English and Russian are taught as second or third languages.

Azerbaijan's educational system has a democratic and secular character, based on national and international values. All citizens are entitled to 9 years of compulsory general education, and the right to education is a fundamental right enshrined in the Constitution and the Education Law of the Republic of Azerbaijan. The country's location as a trading crossroads has also contributed to its development as a centre for craft art, music, dance, and literature.

Azerbaijan is a secular state that guarantees religious freedom

While Azerbaijan guarantees religious freedom, the government has been criticised for its treatment of religious activists and minority religious groups. The government requires religious organisations to register with the State Committee on Work with Religious Associations (SCWRA) and has been known to deny registration to certain groups, particularly those with fewer than 50 members. The government also controls the importation, distribution, and sale of religious materials, and it has been known to censor religious literature and close down religious institutions that it considers objectionable.

The majority of the population in Azerbaijan is Muslim, mainly Shia. However, there are also significant populations of Russian Orthodox, Georgian Orthodox, Armenian Apostolic, Jews, and other religious groups. While the constitution protects religious freedom, there have been reports of restrictions on certain religious practices, particularly for minority groups. For example, the government has banned the wearing of headscarves in passport photos and prohibited Ashura festivities in public. There have also been reports of physical abuse, arrest, and imprisonment of religious activists, particularly those associated with unregistered religious groups.

Despite these concerns, Azerbaijan's commitment to secularism and religious freedom is evident in its constitution and legal framework. The country's religious demographics and history of tolerance towards traditional minority religious groups demonstrate a diverse and relatively stable religious landscape.

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