Splendid Isolation?

Azerbaijan's Economy Between Crisis Resistance and Debased Performance

Author(s): Gerald Hübner, Michael Jainzik
Editor(s): Lili Di Puppo, Iris Kempe, Matthias Neumann, Robert Orttung, Jeronim Perovic
Series: Caucasus Analytical Digest (CAD)
Issue: 6
Pages: 12-15
Publisher(s): Center for Security Studies (CSS), ETH Zurich; Jefferson Institute, Washington D.C.; Heinrich Böll Foundation, Tbilisi; Research Centre for East European Studies, University of Bremen
Publication Year: 2009

The global financial and economic crisis reached Azerbaijan with a time lag and - so far - to a much lesser extent than most of its peers in Eastern Europe. Two causes are responsible for this outcome. First, the enormous oil revenues received in recent years led to a certain macroeconomic stability and resulted in a financial cushion, which gives enough leeway for the state to mitigate the short-term impacts of the crisis. Second, the financial sector is still small and only integrated into the global financial architecture in a limited way. It was hence less affected by the crisis than financial sectors in other European transition countries. But the dramatic drop in oil prices shows the vulnerability of the economy due to its weak diversification and high dependency on the extractive industries sector. Thus, the country is facing the challenge to diversify its economy and develop its value chains across sectors. This holds true especially for the small and medium size enterprise segment of Azerbaijan.

Download:

English (PDF)