Literature review

According to the DEVELOPMENT CONCEPT AZERBAIJAN - 2020: OUTLOOK FOR THE

FUTURE, In 2020, Azerbaijan will be an economically and politically developed and competitive
country. As a result of the measures stipulated by the concept, by the end of the period, the volume of per
capita GDP in the country will increase more than twice and reach 13,000 US dollars.
In 2020 Azerbaijan is expected to become a full member of the group of countries with high average
income(World bank Classification of GDP).
Long-term growth targets of Azerbaijan for non-oil sector:
According AZERBAIJAN 2020: THE VISION OF THE FUTURE strategy 1)it is predicted doubling
Azerbaijan GDP until 2020
2) Also on average 7-8 percent growth annual
3) Majority of growth should come from non-oil industries, specially agriculture being one major
contributor to this growth
The economic advancement allowed the government to pursue successful regional policy, too. The most
important measures of state importance were the realization of two State Programs (2004-2008 and 20092013) on social-economic development of the regions, followed later by the implementation of the third
Program (2014-2018). The State Programme on Regional Socio-economic Development is aiming to
develop a socioeconomic infrastructure of the regions and to create a suitable business environment for
local farmers and entrepreneurs. The results of the first phase of the State Program were evaluated as
successful by the Government as during this period total production in the non-oil sector increased by 1.8
times, the total increase in agricultural production was 25.2% and the poverty level throughout country
decreased from 40% to 13.2%. (Rashad Majidov, 2013, Azerbaijan Agriculture in a Nutshell)
For that reasons special attention will be paid to the processing of agricultural produce as a sphere that is
of special importance in terms of developing the non-oil industry, and complex measures will be taken to
increase the productive capability of existing agrarian processing enterprises as a result of the application
of modern technologies and to create new enterprises. State support will continue in line with
international experience in order to stimulate the intensive and effective development of the agrarian
sector. Additional measures will be taken to create an environment where the allocation of funds (loans)
to this sector by private banks and credit organizations will be encouraged, while the agricultural
insurance procedures will be improved. The provision of agricultural producers with modern equipment,
fertilizers, seeds and seedlings will improve and in addition, it is planned to improve scientific support
and staff training in the agrarian sector. In order to ensure the intensive development of various
agricultural spheres, stimulating measures will be implemented and initiatives to support major graingrowing farms will be supported (Final Report June 2005, World Bank)
Furthermore, the agricultural sector has good potential to make important contributions to economic
growth, diversification, poverty reduction and employment creation in rural areas of Azerbaijan, but to
realize this potential more must be done to improve markets. A major challenge for Azerbaijan today is to
diversify its economy away from oil and to spread the benefits of economic growth to rural areas.
Agriculture can help the country to reach these goals because it is the largest economic sector in
Azerbaijan after oil, and is the largest employer in the country, providing 40% of employment in 2002
compared to only 1% for oil. It has also contributed more than any other sector to poverty reduction in
rural areas. (Final Report June 2005, World Bank)

From this chart its clear that the countrys agricultural sector is growing fast, and great increasing
surplus is being created due to increase in investments by the

government and private sector. So things are being done to develop the sector. But is this actually enough,
could we increase the surplus by hundreds times. If we take wine or hazelnut industry wed see that we
are actually far, far behind some of the
European countries which dont have a better soil or climatic conditions.
The volume of surplus value created in agriculture sector, mln. AZN(Source: Reports of the State
Statistical Committee and Ministry of Economic Development)

Agriculture also has an economic importance which is more significant than its current monetary value
because of its role in food security and rural poverty reduction. It is an important source of income and
stability for rural areas where the benefits of Azerbaijan's petroleum wealth are much less evident, and its
health will determine in part the extent of rural-to-urban migration. (Final Report June 2005, World Bank)
On the other hand, while Azerbaijan has made progress in reforming the agricultural sector, much remains
to be done. If this progress is to continue and expand, more needs to be done for the sector. Efficient and
rapid production growth needs to be sustained for continued poverty reduction, employment creation and
sector growth. This will happen if growth is focused on those sectors where Azerbaijan enjoys a natural
comparative advantage and on market- and export-oriented products. However, as we have seen, markets
have not done a good job of translating comparative advantage into opportunities, and this reduces
incentives for farmers. As a result, growth in the agricultural sector has begun to slow, down to 5.6% in
2003. In order to create the right incentives for farmers and sustain growth, improvements in the
organization of agricultural markets are required.

References:
http://www.president.az/files/future_en.pdf
http://teas.eu/files/files/ministry-of-agriculture-presentation.pdf
http://siteresources.worldbank.org/AZERBAIJANEXTN/Resources/AZ_Ag_Mktg_Study_Final_Report.p
df
http://0-www.jstor.org.library.ada.edu.az/stable/pdf/10.1086/376884.pdf