Azerbaijan : Inclusive Growth in a Resource-Rich Economy

Onder, Harun

Azerbaijan : Inclusive Growth in a Resource-Rich Economy

Autores

Onder, Harun

Editor

Washington, DC: World Bank

Descripción

Azerbaijan experienced a 'golden age' in the last decade, during which the average growth rate reached record high levels and poverty decreased significantly. On average, the economy grew by 15.3 percent per year in real terms during this period, mainly driven by the oil sector (21.5 percent growth per year), but with a significant contribution from the non-oil sector (11.1 percent per year). As a result, poverty declined dramatically from 49.6 percent in 2001 to 15.8 percent in 2008 the latest year for which household survey data was available when this report was prepared. This report takes an inclusive growth approach to investigating the ways in which the country's high growth was translated into significant poverty reduction. First chapter summarizes the sources of growth in Azerbaijan with an emphasis on structural transformation and discusses highlights of the inclusive growth methodology. Second chapter explores how growth helped to reduce poverty. Third chapter analyzes the sustainability and inclusiveness of the recent growth. Finally, fourth chapter focuses on the structural obstacles that constrain further inclusive growth in Azerbaijan. The last chapter recommends some policies to overcome these obstacles. The main findings of this report call for a careful strategy in promoting further inclusive growth in Azerbaijan. The mechanisms that facilitated drastic reductions in poverty in the last decade a strong rise in fiscal transfers and in the real wage were made possible by the oil boom. However, these mechanisms also reduced the pace of structural transformation in the Azerbaijan economy. Distorted incentives in demand and supply sides of the labor market have seemed to weaken the correlation between productivity growth and employment shares. This report finds that the failure to follow a fiscal rule over the past decade has led to excessive domestic absorption with a resulting barriers against further development and diversification in the tradable sectors (principally agriculture and manufacturing) and against employment creation within those sectors, as well as leading to an unsustainable growth in public expenditures, and to inadequate long-term public savings in the Oil Fund. Thus, the reassertion of a fiscal rule that constrains domestic absorption and promotes economic diversification is a necessary condition for achieving sustained inclusive growth.

Palabras clave

ACCESS TO MARKETS, ACCOUNTING, AGE GROUP, AGRICULTURAL GROWTH, AGRICULTURAL LAND, AGRICULTURAL OUTPUT, AGRICULTURAL SECTOR, AGRICULTURAL SERVICES, AGRICULTURAL WAGES, AUDITING, AVERAGE PRODUCTIVITY, AVERAGE WAGE, AVERAGE WAGES, BANKS, CAPITAL FORMATION, CASH TRANSFERS, CENTRAL PLANNING, COLLEGE EDUCATION, COMMUNITY GROUPS, CONFLICT, CONSOLIDATION, CONSUMPTION EXPENDITURES, CREATING JOBS, CURRENT PRICES, DISTORTED INCENTIVES, DIVIDENDS, DOMESTIC MARKET, ECONOMIC ACTIVITY, ECONOMIC DIVERSIFICATION, ECONOMIC GROWTH, ECONOMIC INTEGRATION, ECONOMICS, EMPLOYABILITY, EMPLOYEE, EMPLOYMENT, EMPLOYMENT DYNAMICS, EMPLOYMENT GENERATION, EMPLOYMENT GROWTH, EMPLOYMENT OPPORTUNITIES, EMPLOYMENT OUTCOMES, EMPLOYMENT RATE, EMPLOYMENT RATES, EMPLOYMENT SERVICE, EMPLOYMENT SHARE, EMPLOYMENT STATUS, FARMERS, FEMALE EMPLOYMENT, FEMALE PARTICIPATION, FINANCIAL INSTRUMENTS, FINANCIAL SERVICES, FIRM SIZE, FISCAL DEFICITS, FISCAL POLICIES, FISHING, FOOD SAFETY, FORESTRY, FORMAL LABOR MARKET, FORMAL SECTOR WAGES, GOVERNMENT EXPENDITURES, HEALTH SERVICES, HIGH EMPLOYMENT, HOUSEHOLD CONSUMPTION, HOUSEHOLD SURVEY, IMPACT ON POVERTY, INCIDENCE ANALYSIS, INCIDENCE OF POVERTY, INCOME, INCOME DISTRIBUTION, INCOME REDISTRIBUTION, INFLATION, INFLATION RATES, INFORMAL ECONOMY, INFORMAL EMPLOYMENT, INNOVATION, INSURANCE, INTEREST RATES, IRRIGATION, JOB CREATION, JOB FAIR, JOB FAIRS, JOB MARKET, JOB PLACEMENT, JOB SEARCH, JOB SECURITY, JOB SEEKERS, JOBS, LABOR CONTRACTS, LABOR FORCE, LABOR FORCE PARTICIPATION, LABOR MARKET, LABOR MARKET CHARACTERISTICS, LABOR MARKET CONDITIONS, LABOR MARKET INDICATORS, LABOR MARKET OUTCOMES, LABOR PRODUCTIVITY, LABOR PRODUCTIVITY GROWTH, LABOR SHARE, LABOR SUPPLY, LAND OWNERSHIP, LAND REFORM, LEGAL FRAMEWORK, LEGISLATION, LIVING STANDARDS, LOW EMPLOYMENT, MACROECONOMIC FLUCTUATIONS, MARKET DISTORTIONS, MIGRATION, MINIMUM WAGE, MONOPOLIES, NOMINAL WAGES, OIL, OIL PRICES, OIL SECTOR, OUTPUTS, PENSIONS, PER CAPITA CONSUMPTION, POOR HOUSEHOLD, POOR HOUSEHOLDS, POVERTY ALLEVIATION, POVERTY ALLEVIATION STRATEGY, POVERTY ASSESSMENT, POVERTY LINE, POVERTY RATES, POVERTY REDUCTION, POVERTY REDUCTION STRATEGY, PRIMARY SOURCE, PRIVATE SECTOR, PRIVATE SECTORS, PRODUCTION COSTS, PRODUCTIVE ACTIVITIES, PRODUCTIVE EMPLOYMENT, PRODUCTIVITY DECOMPOSITION, PRODUCTIVITY GAINS, PRODUCTIVITY GROWTH, PUBLIC EXPENDITURES, PUBLIC HOUSING, PUBLIC SAVINGS, PUBLIC SPENDING, QUOTAS, REAL WAGE, REAL WAGES, REMOTE AREAS, RENTS, RETAIL TRADE, RETIREMENT, RUNNING WATER, RURAL, RURAL AREAS, RURAL EMPLOYMENT, RURAL LABOR, RURAL POOR, RURAL POPULATION, RURAL POVERTY, RURAL TRANSFORMATION, RURAL WORKERS, SAFETY, SAFETY REGULATION, SAFETY REGULATIONS, SAVINGS, SICK LEAVE, SKILL PREMIUM, SOCIAL ASSISTANCE, SOCIAL CAPITAL, SOCIAL INCLUSION, SOCIAL INSURANCE PROGRAMS, SOCIAL SECURITY, SOCIAL SERVICES, SUSTAINABLE GROWTH, TARGETING, TAX RATES, TECHNOLOGICAL CHANGE, TOTAL EMPLOYMENT, TOTAL FACTOR PRODUCTIVITY, TOTAL UNEMPLOYMENT, TRANSFER PROGRAMS, TRANSPORT, UNEMPLOYED, UNEMPLOYED PEOPLE, UNEMPLOYMENT, UNEMPLOYMENT ASSISTANCE, UNEMPLOYMENT BENEFIT, UNEMPLOYMENT RATE, UNEMPLOYMENT RATES, UNEMPLOYMENT SPELLS, UNINTENDED CONSEQUENCES, URBAN WORKERS, VOCATIONAL EDUCATION, VOCATIONAL TRAINING, WAGE GROWTH, WAGE POLICY, WAR, WORKER, WORKERS, WORKING POOR, YOUTH EMPLOYMENT, YOUTH UNEMPLOYMENT