Azerbaijan on OneWorld
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| © Eurasianet (Open Society Institute) |
More than fifteen years on from Azerbaijan’s independence, many Soviet spectres linger: environmental degradation, decaying infrastructure, rampant corruption, unresolved territorial disputes and widespread poverty. A huge weight of expectation rests on the boom in oil revenue that Azerbaijan now enjoys. Reforming lack lustre standards of democracy so that this windfall can be managed to the benefit of the population at large will be the greatest challenge over the next decade.
updated June 2008
Poverty in Azerbaijan
Azerbaijan's approach to the Millennium Development Goals (MDGs) is based on its 2006-2015 State Programme for Poverty Reduction and Sustainable Development (SPPRSD) which is aligned with both the targets and the timescale of the Goals. The oil revenue that Azerbaijan can expect over the period to 2015, if responsibly invested, should provide more than sufficient resources. However, although government expenditure on health, education and social programmes has increased sharply, the proportion of the total budget represented by this spending in 2007 remained less than 30%, little more than is awarded to the military. The country’s poor position of 98 in the UN’s Human Development Index does not yet reflect the potential of a hydrocarbon economy.
Nevertheless the government claims a dramatic fall in poverty in the period 2003-2005, quoting a reduction from 45% to 20% of the population living below the poverty line which is assessed by reference to a minimum subsistence income. Poverty is mainly located in rural areas with 40% of the population engaged in agriculture, a sector suffering long term decline in investment and output. Although the SPPRSD aims for self-sufficiency in food staples by 2015, Azerbaijan is for now dependent on imported grain, largely from Kazakhstan and Russia. Although state social assistance programmes are available for the poorest households, the SPPRSD acknowledges that fundamental reforms are required. High inflation is already threatening the lowest income groups.
The legacy of the Soviet era gives Azerbaijan a head-start in the education Goals with near universal literacy and good enrolment rates in primary education for boys and girls. However, the general quality of education is acknowledged to be a concern, this and other public services constrained by crumbling infrastructure. In the context of the MDGs, the lack of investment has hampered progress in provision of safe drinking water and sanitation, both of which are behind target.
Health in Azerbaijan
Water contaminated by industrial waste and poor sanitation, particularly on the Caspian shores, exacerbates the risks of cholera, hepatitis A and typhoid. Drug-resistant tuberculosis is a problem in Azerbaijan and the health system is in need of major reform. Identifying key problem areas and monitoring progress is hampered by the absence of data although mortality rates are known to be high relative to other countries in the region and in relation to Azerbaijan’s financial resources. Low salaries for healthcare workers and a national shortage of medical equipment and drugs create a widespread necessity for patients to pay bribes in order to receive treatment or medication.
The Economy in Azerbaijan
Azerbaijan’s economy is dependent on revenue created from the export of oil and gas. The huge influx of foreign investment in these energy extraction industries has created a boom in export revenues; furthermore the unpredicted rocketing oil prices necessitates frequent recalculation of the riches available to the country. However, this economic windfall has a finite time span and is predicted to last only until 2020 or 2025.
The effective management of oil revenues is critical as the transformation of oil wealth into economic prosperity is a notoriously difficult task. Excessive, rapid and mismanaged public expenditure of oil wealth frequently damages the economy through soaring inflation and the onslaught of ‘Dutch disease’ in which non-oil industries fail to take root.
The government has acknowledged that a proportion of oil revenue must be re-invested in developing human capital, improving physical infrastructure, job creation and growing non-energy sector industries. Over 600,000 Azeris continue to work overseas in Russia, returning remittances of about $1 billion pa. The government has established the SOFAZ oil fund which is projected to grow to $200 billion by 2025.
The OneWorld Azerbaijan Guide was first published in April 2006 with a text written by Volunteer Editor Edward Roman
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Azerbaijan's approach to the Millennium Development Goals (MDGs) is based on its 2006-2015 State Programme for Poverty Reduction and Sustainable Development (SPPRSD) which is aligned with both the targets and the timescale of the Goals. The oil revenue that Azerbaijan can expect over the period to 2015, if responsibly invested, should provide more than sufficient resources. However, although government expenditure on health, education and social programmes has increased sharply, the proportion of the total budget represented by this spending in 2007 remained less than 30%, little more than is awarded to the military. The country’s poor position of 98 in the UN’s Human Development Index does not yet reflect the potential of a hydrocarbon economy.
Nevertheless the government claims a dramatic fall in poverty in the period 2003-2005, quoting a reduction from 45% to 20% of the population living below the poverty line which is assessed by reference to a minimum subsistence income. Poverty is mainly located in rural areas with 40% of the population engaged in agriculture, a sector suffering long term decline in investment and output. Although the SPPRSD aims for self-sufficiency in food staples by 2015, Azerbaijan is for now dependent on imported grain, largely from Kazakhstan and Russia. Although state social assistance programmes are available for the poorest households, the SPPRSD acknowledges that fundamental reforms are required. High inflation is already threatening the lowest income groups.
The legacy of the Soviet era gives Azerbaijan a head-start in the education Goals with near universal literacy and good enrolment rates in primary education for boys and girls. However, the general quality of education is acknowledged to be a concern, this and other public services constrained by crumbling infrastructure. In the context of the MDGs, the lack of investment has hampered progress in provision of safe drinking water and sanitation, both of which are behind target.
Health in Azerbaijan
Water contaminated by industrial waste and poor sanitation, particularly on the Caspian shores, exacerbates the risks of cholera, hepatitis A and typhoid. Drug-resistant tuberculosis is a problem in Azerbaijan and the health system is in need of major reform. Identifying key problem areas and monitoring progress is hampered by the absence of data although mortality rates are known to be high relative to other countries in the region and in relation to Azerbaijan’s financial resources. Low salaries for healthcare workers and a national shortage of medical equipment and drugs create a widespread necessity for patients to pay bribes in order to receive treatment or medication.
The Economy in Azerbaijan
Azerbaijan’s economy is dependent on revenue created from the export of oil and gas. The huge influx of foreign investment in these energy extraction industries has created a boom in export revenues; furthermore the unpredicted rocketing oil prices necessitates frequent recalculation of the riches available to the country. However, this economic windfall has a finite time span and is predicted to last only until 2020 or 2025.
The effective management of oil revenues is critical as the transformation of oil wealth into economic prosperity is a notoriously difficult task. Excessive, rapid and mismanaged public expenditure of oil wealth frequently damages the economy through soaring inflation and the onslaught of ‘Dutch disease’ in which non-oil industries fail to take root.
The government has acknowledged that a proportion of oil revenue must be re-invested in developing human capital, improving physical infrastructure, job creation and growing non-energy sector industries. Over 600,000 Azeris continue to work overseas in Russia, returning remittances of about $1 billion pa. The government has established the SOFAZ oil fund which is projected to grow to $200 billion by 2025.
The OneWorld Azerbaijan Guide was first published in April 2006 with a text written by Volunteer Editor Edward Roman
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