Connect with us

Economy

Azerbaijan’s geo-economic expansion prospects: Conventional or emerging markets?

Published

on

In the background of global geo-economic shifting, nation states confront significant challenges in terms of appropriate positioning. In case of Azerbaijan, these challenges are also related to regional geopolitical imbalances as well as structural problems existing in the national economy.

Throughout its independence, Azerbaijan has pursued the way to formulate its foreign economic relations through maximizing its economic benefits in the context of achieving relevance to its national interests. Indeed, country’s geographical location and economic strength gained thanks to oil boom gave birth to the possibility of formulation of Azerbaijan as a regional geo-economic pivot.

Azerbaijan iscurrently conducting multi-vectorial geo-economic development strategy in order to maximize its geographic advantages as well as maintaining better positioning in the framework of massive realignments observing in global economic architecture.Looking through of the policy frameworks which encapsulate country’s medium and long-term economic vision, it becomes obvious that Azerbaijan will continue to adjust these strategies to the “new game rules” of geo-economic shifting.

However, it should also be mentioned that in some cases, Azerbaijan’s geographic location takes part as an impediment rather than advantage.Referring to conventional understanding of the concept of “space”, Azerbaijan has only limited number of spaces in which geo-economic sustainability can be realized. However, shifting from geopoliticsrelying on the dominance over geographic basins to the geo-economics which relying on controlling financial and trade flows creates an excellent opportunity for Azerbaijan to tackle with this problem. In this regard, it should be emphasized that successful realization of trade-logistics and energy transport projects in recent years have created a sound ground to continue geo-economic expansion in the new stage of economic development. But the question currently standing in front of this expansion strategy is that which markets or “geo-economic spaces” should be main target?

Assessment of trans-regional projects initiated or supported by Azerbaijan during last two decades indicate that these initiatives are mainly directed to mitigate EU’s dependence on several routes or building an appropriate infrastructure to bolster these countries’ trade relations with Central Asian countries. This factor was strategically and economically beneficial for Azerbaijan in terms of getting better access to European markets and eliminating infrastructural backwardness inherited from Soviets. However, as aforementioned, current realignments in geo-economic landscape make it necessity to add new directions and quality features to the geo-economic expansion strategy of the country.

In this regard, Strategic Road Map for the perspectives of the national economy which approved by President Ilham Aliyev in late 2016 can be accepted as a reliable guide to find answer to the question put above. It is not secret that in recent years, we are observing geo-economic shifting from Euro-Atlantic region to the Asia-Pasific. This shifting is gradual and time-consuming process and cannot be constrained only by Chinese economic expansion or South Korean success story.

According to the World Bank, over the next three years the $75 trillion global economy will expand by more than $6.5 trillion in size. It is also estimated that China and India will be among Top 3 contributors to real GDP growth predicted for 2018-2020 while Turkey, Indonesia, South Korea and Japan will be also among major contributors.Furthermore, emerging and developing Asia seems will be achieved to quadruple its share in global GDP based on PPP during 1980-2020.

In the light of these figures, it can be put forward that Azerbaijan can take more benefits through getting better access to these emerging Asian markets. Furthermore, taking into consideration country’s medium and long-term economic vision in which acceleration of joining to global value chains has been mentioned as one of the strategic targets,integration to these markets promise more economic gains. The scale of these gains will not be constrained only in the framework of monetary or financial units. Particularly, significant progress achieved in realization of North-South and East-West transport corridors in recent years, additionally much brighter prospective transport projects which are expected to be realizedin the near future will lead to increase Azerbaijan’s geo-economic importance. This achievement can be accepted as a result of continuous efforts made by Azerbaijan during last two decades. As mentioned by President Aliyev, situated between Europe and Asia, Azerbaijan will continue to use wisely its geographical location to become one of the leading transportation hubs in Eurasia. Pursuant to his opinions, it is highly predictable that Azerbaijan geo-economic expansion will continue in accordance with regional and global economic landscape movements.

Getting efficient positioning in regional integration movements which dominantly shaping under priority of national interests is one of the key directions of Azerbaijan’s geo-economic expansion strategy.In this regard, preserving independence in integration processes is one of the significant imperatives in Azerbaijan’s foreign economic and trade relations.It is worth to mention that Azerbaijan, unlike to some of other region countries, still preserves independence in making choices regarding with integration movements. Therefore, Azerbaijan’s current stance lets us put forward the idea that consistence of joining to such type of integration movements with the country’s strategic foreign and domestic economic targets is more deterministic imperative rather than nominal participation.This hypothesisalso involves some insights regarding with the issue that in which direction geo-economic expansion ought to be continued in the following years.

On the macroeconomic and foreign trade perspective, it is worth to emphasize that Azerbaijan has achieved significant growth rates during 2004-2014. After some adverse effects of oil price crunch after 2014 Azerbaijan economy is currently in the process of adjusting new equilibrium points.This process is conducting not only through improving macroeconomic indicators, but also through making changes in geographic orientation of the country’s foreign trade relations. According to the official figures, the share of Asian markets is averagely 38% in exports and 39% in imports. However, analyzing of commodity structure of this trade turnover exhibits that in exports low value-added commodities dominate while in imports particularly medium and high value added ones take the lion share. This structure of trade relations with Asian countries brings forth some challenges in terms of diversifying commodity structure of exports as well as increasing turnover with these emerging economies. Therefore, in the context of geo-economic expansion, it would be more reasonable for Azerbaijan to pay much attention to join global value chains appearing in these markets. Additionally, thanks to already finished and prospective  trade-logistics and transportation projects, Azerbaijan’s opportunities to benefit from new trade reality which involves geographical fragmentation of production is increasing. This new reality offers to accelerate diversification of economy with limited resources avoiding from conventional barriers existing in small economies such as Azerbaijan.

Finally, Azerbaijan seems very determined to become a geo-economic pivot in its region relying on its comprehensive and continuous development strategies and rising international economic competitiveness which achieved during recent years. This deterministic stance will continue through shifting beyond a new quality stage of geo-economic expansion in the era of formulation multipolar global economic order. This shifting additionally requires revision of geographic expansion postulates of the country’s geo-economic development strategies. The characteristics of this revisionwill be determined by systemic realignments in the global economy.

Continue Reading
Comments

Economy

Record high remittances to low- and middle-income countries in 2017

MD Staff

Published

on

Remittances to low- and middle-income countries rebounded to a record level in 2017 after two consecutive years of decline, says the World Bank’s latest Migration and Development Brief.

The Bank estimates that officially recorded remittances to low- and middle-income countries reached $466 billion in 2017, an increase of 8.5 percent over $429 billion in 2016. Global remittances, which include flows to high-income countries, grew 7 percent to $613 billion in 2017, from $573 billion in 2016.

The stronger than expected recovery in remittances is driven by growth in Europe, the Russian Federation, and the United States. The rebound in remittances, when valued in U.S. dollars, was helped by higher oil prices and a strengthening of the euro and ruble.

Remittance inflows improved in all regions and the top remittance recipients were India with $69 billion, followed by China ($64 billion), the Philippines ($33 billion), Mexico ($31 billion), Nigeria ($22 billion), and Egypt ($20 billion).

Remittances are expected to continue to increase in 2018, by 4.1 percent to reach $485 billion. Global remittances are expected to grow 4.6 percent to $642 billion in 2018.

Longer-term risks to growth of remittances include stricter immigration policies in many remittance-source countries. Also, de-risking by banks and increased regulation of money transfer operators, both aimed at reducing financial crime, continue to constrain the growth of formal remittances.

The global average cost of sending $200 was 7.1 percent in the first quarter of 2018, more than twice as high as the Sustainable Development Goal target of 3 percent. Sub-Saharan Africa remains the most expensive place to send money to, where the average cost is 9.4 percent. Major barriers to reducing remittance costs are de-risking by banks and exclusive partnerships between national post office systems and money transfer operators. These factors constrain the introduction of more efficient technologies—such as internet and smartphone apps and the use of cryptocurrency and blockchain—in remittance services.

“While remittances are growing, countries, institutions, and development agencies must continue to chip away at high costs of remitting so that families receive more of the money. Eliminating exclusivity contracts to improve market competition and introducing more efficient technology are high-priority issues,” said Dilip Ratha, lead author of the Brief and head of KNOMAD.

In a special feature, the Brief notes that transit migrants—who only stay temporarily in a transit country—are usually not able to send money home. Migration may help them escape poverty or persecution, but many also become vulnerable to exploitation by human smugglers during the transit. Host communities in the transit countries may find their own poor population competing with the new-comers for low-skill jobs.

“The World Bank Group is mobilizing financial resources and knowledge on migration to support migrants and countries with the aim of reducing poverty and sharing prosperity. Our focus is on addressing the fundamental drivers of migration and supporting the migration-related Sustainable Development Goals and the Global Compact on Migration,” said Michal Rutkowski, Senior Director of the Social Protection and Jobs Global Practice at the World Bank.

Multilateral agencies can help by providing data and technical assistance to address adverse drivers of transit migration, while development institutions can provide financing solutions to transit countries. Origin countries need to empower embassies in transit countries to assist transit migrants.

The Global Compact on Migration, prepared under the auspices of the United Nations, sets out objectives for safe, orderly and regular migration. Currently under negotiation for final adoption in December 2018, the global compact proposes three International Migration Review Forums in 2022, 2026 and 2030. The World Bank Group and KNOMAD stand ready to contribute to the implementation of the global compact.

Regional Remittance Trends

Remittances to the East Asia and Pacific region rebounded 5.8 percent to $130 billion in 2017, reversing a decline of 2.6 percent in 2016. Remittance to the Philippines grew 5.3 percent in 2017 to $32.6 billion. Flows to Indonesia are expected to grow 1.2 percent to $9 billion in 2017, reversing the previous year’s sharp decline. Stronger growth in transfers from countries in Southeast Asia helped offset lower remittance flows from other regions, particularly the Middle East and the United States. Remittances to the region are expected to grow 3.8 percent to $135 billion in 2018.

Remittances to countries in Europe and Central Asia grew a rapid 21 percent to $48 billion in 2017, after three consecutive years of decline. Main reasons for the growth are stronger growth and employment prospects in the euro area, Russia, and Kazakhstan; the appreciation of the euro and ruble against the U.S. dollar; and the low comparison base after a nearly 22 percent decline in 2015. Remittances in 2018 will moderate as the region’s growth stabilizes, with remittances expected to grow 6 percent to $51 billion.

Remittances flows into Latin America and the Caribbean grew 8.7 percent in 2017, reaching another record high of nearly $80 billion. Main factors for the growth are stronger growth in the United States and tighter enforcement of U.S. immigration rules which may have impacted remittances as migrants remitted savings in anticipation of shorter stays in the United States. Remittance growth was robust in Mexico (6.6 percent), El Salvador (9.7 percent), Colombia (15 percent), Guatemala (14.3), Honduras (12 percent), and Nicaragua (10 percent). In 2018, remittances to the region are expected to grow 4.3 percent to $83 billion, backed by improvement in the U.S. labor market and higher growth prospects for Italy and Spain.

Remittances to the Middle East and North Africa grew 9.3 percent to $53 billion in 2017, driven by strong flows to Egypt, in response to more stable exchange rate expectations. However, the growth outlook is dampened by tighter foreign-worker policies in Saudi Arabia in 2018. Cuts in subsidies, increase in various fees and the introduction of a value added tax in Saudi Arabia and the United Arab Emirates have increased the cost of living for expatriate workers. In 2018, growth in remittances to the region is expected to moderate to 4.4 percent to $56 billion.

Remittances to South Asia grew a moderate 5.8 percent to $117 billion in 2017. Remittances to many countries appear to be picking up after the slowdown in 2016. Remittances to India picked up sharply by 9.9 percent to $69 billion in 2017, reversing the previous year’s sharp decline. Flows to Pakistan and Bangladesh were both largely flat in 2017, while Sri Lanka saw a small decline (-0.9 percent). In 2018, remittances to the region will likely grow modestly by 2.5 percent to $120 billion.

Remittances to Sub-Saharan Africa accelerated 11.4 percent to $38 billion in 2017, supported by improving economic growth in advanced economies and higher oil prices benefiting regional economies. The largest remittance recipients were Nigeria ($21.9 billion), Senegal ($2.2 billion), and Ghana ($2.2 billion). The region is host to several countries where remittances are a significant share of gross domestic product, including Liberia (27 percent), The Gambia (21 percent), and Comoros (21 percent). In 2018, remittances to the region are expected to grow 7 percent to $41 billion.

Continue Reading

Economy

A bio-based, reuse economy can feed the world and save the planet

MD Staff

Published

on

Transforming pineapple skins into product packaging or using potato peels for fuel may sound far-fetched, but such innovations are gaining traction as it becomes clear that an economy based on cultivation and use of biomass can help tackle pollution and climate change, the United Nations agriculture agency said on Friday.

A sustainable bioeconomy, which uses biomass – organic materials, such as plants and animals and fish – as opposed to fossil resources to produce food and non-food goods “is foremost about nature and the people who take care of and produce biomass,” a senior UN Food and Agriculture Organization (FAO)  official said at the 2018 Global Bioeconomy Summit in Berlin, Germany.

This means family farmers, forest people and fishers, who are also “holders of important knowledge on how to manage natural resources in a sustainable way,” she explained.

Maria Helena Semedo, FAO Deputy Director-General for Climate and Natural Resources, stressed how the agency not only works with member States and other partners across the conventional bioeconomy sectors – agriculture, forestry and fisheries – but also relevant technologies, such as biotechnology and information technology to serve agricultural sectors.

“We must foster internationally-coordinated efforts and ensure multi-stakeholder engagement at local, national and global levels,” she said, noting that this requires measurable targets, means to fulfil them and cost-effective ways to measure progress.

With innovation playing a key role in the bio sector, she said,  all the knowledge – traditional and new – should be equally shared and supported.

Feeding the world, saving the planet

Although there is enough food being produced to feed the planet, often due to a lack of access, estimates show that some 815 million people are chronically undernourished.

“Bioeconomy can improve access to food, such as through additional income from the sale of bio-products,” said Ms. Semedo.

She also noted its potential contribution to addressing climate change, albeit with a warning against oversimplification.

“Just because a product is bio does not mean it is good for climate change, it depends on how it is produced, and in particular on much and what type of energy is used in the process,” she explained.

FAO has a longstanding and wide experience in supporting family farmers and other small-scale biomass producers and businesses.

Ms. Semedo, told the summit that with the support of Germany, FAO, together with an international working group, is currently developing sustainable bioeconomy guidelines.

Some 25 cases from around the world have already been identified to serve as successful bioeconomy examples to develop good practices.

A group of women fishers in Zanzibar are producing cosmetics from algae – opening up a whole new market with sought-after niche products; in Malaysia, a Government programme supports community-based bioeconomy; and in Colombia, a community is transforming pineapple skins into biodegradable packaging and honey into royal jelly – and these are just a few examples of a bioeconomy in action.

“Together, let’s harness the development for sustainable bioeconomy for all and leave no one behind,” concluded Ms. Semedo.

Continue Reading

Economy

Belarus: Strengthening Foundations for Sustainable Recovery

MD Staff

Published

on

The speed of economic recovery has accelerated in early 2018, but the foundations for solid growth need to be strengthened, says the latest World Bank Economic Update on Belarus.

The economic outlook remains challenging due to external financing needs and unaddressed domestic structural bottlenecks. Improved household consumption and investment activity, along with a gradual increase in exports, will help the economy to grow, but unlikely above three percent per annum over the medium term.

“The only way for ordinary Belarusians to have better incomes in the long run is to increase productivity, which requires structural change. While macroeconomic adjustment has brought stability, only structural change will bring solid growth to the country,” said Alex Kremer, World Bank Country Manager for Belarus. “Inflation has hit a record low in Belarus, driving the costs of domestic borrowing down. However, real wages are now again outpacing productivity, with the risks of worsening cost competitiveness and generating cost-push inflation.”

A Special Topic Note of the World Bank Economic Update follows the findings of the latest World Bank report, The Changing Wealth of Nations 2018, which measures national wealth, composed of produced, natural, and human capital, and net foreign assets. Economic development comes from a country’s wealth, especially from human capital – skills and knowledge.

“Belarus has a good composition of wealth for an upper middle-income country. The per capita level of human capital exceeds both Moldova and Ukraine. However, the accumulation of physical capital has coincided with a deterioration in the country’s net foreign asset position,” noted Kiryl Haiduk, World Bank Economist. “Belarus needs to rely less on foreign borrowing and strengthen the domestic financial system, export more, and strengthen economic institutions that improve the efficiency of available physical and human capital.”

Since the Republic of Belarus joined the World Bank in 1992, lending commitments to the country have totaled US$1.7 billion. In addition, grant financing totaling US$31 million has been provided, including to programs involving civil society partners. The active investment lending portfolio financed by the World Bank in Belarus includes eight operations totaling US$790 million.

Continue Reading

Latest

Newsdesk3 hours ago

New Funding for Mindanao Trust Fund to Strengthen Peace and Development in Southern Philippines

Efforts to bring peace and progress in Mindanao were reaffirmed today following the signing of a new agreement that will...

Economy5 hours ago

Record high remittances to low- and middle-income countries in 2017

Remittances to low- and middle-income countries rebounded to a record level in 2017 after two consecutive years of decline, says...

Newsdesk6 hours ago

Bangladesh: World Bank Increases Support for Clean, Renewable Energy

The World Bank today approved $55 million to expand use of clean renewable energy in rural areas of Bangladesh where...

Newsdesk12 hours ago

Mher Sahakyan on “Belt & Road from the Perspective of China’s National Security”

Moscow, Russian Federation—On April 16-23, 2018, the “The Digital Economy: Man, Technology, Institutes” was held at the Faculty of Economics...

Tech14 hours ago

Busting the Blockchain Hype: How to Tell if Distributed Ledger Technology is Right for You

Blockchain has been hailed as the solution for everything, from resolving global financial inequality, providing IDs for refugees, to enabling...

Green Planet15 hours ago

Building a Climate-Resilient South Asia

Last summer’s monsoon hit South Asia particularly hard and left nearly 1,400 people dead and displaced millions of others. In...

Energy16 hours ago

Indonesia’s ‘Superheroines’ Empowered with Renewables

About a third of Indonesians, roughly 80 million people, live without electricity and many more with only unreliable access. In...

Newsletter

Trending

Copyright © 2018 Modern Diplomacy