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Azerbaijan 2030: National Priorities for Socio-Economic Development

February 02, 2021, 14:10

 

Approved by Order of the President of the Republic of Azerbaijan issued on February 2, 2021

 

POWERFUL NATION AND WELFARE SOCIETY

At the end of the last century, despite a difficult historical period, Azerbaijan was recognized in the world as a country that confidently went through a great evolution in its socio-economic and cultural life and ensured a stable, secure and modern standard of living. The country's international prestige has increased significantly, the nationhood traditions in society have been strengthened, and building of modern socio-economic infrastructure has been successfully implemented. Large financial opportunities generated from economic development have made a significant contribution to macroeconomic stability and growth for many years, creating a strong potential for security.

The reintegration of the territories liberated from the occupation as a result of the victory into the country's overall economy, the advantage created by the opportunities of new international and regional transport and logistics corridors will give a great impetus to the development of Azerbaijan. In this context, the formation of security, stability, prosperity and mutually beneficial cooperation in the region, as well as the development of economic and trade relations will further strengthen the role of Azerbaijan, a leading nation in the South Caucasus, in determining the overall architecture of the region's economy.

Successful socio-economic and political achievements, national and multicultural values give confidence that the power of Azerbaijan, the crossroads of East and West, will grow in the coming years. These opportunities guarantee the strengthening of Azerbaijan's economic sovereignty and its transformation into a powerful nation with a society of high social welfare based on modern living standards by 2030. Azerbaijan has chosen the path of development of a socially oriented market economy to further increase the welfare of the population in the country.

Accelerating economic growth based on high, sustainable, inclusive and mainly private initiatives in order to continuously increase the level of national social welfare, ensuring the return of the population to the liberated territories is the ideological core of Azerbaijan's new development highway. The successful connection of the trinity of society, business and the state will be strengthened for the long-term sustainable and rapid development of our country. Effective and efficient management of the state's role in the economy through market reforms, strengthening private property institutions, business-friendly governance and further liberalization of trade regimes to increase access of local products to foreign markets will be key factors in economic growth. The development of private initiatives in the country on a creative and innovative basis will ensure that economic resources are directed to areas that create higher added value.

Achieving these goals requires the formation of an effective macroeconomic policy framework that serves sustainable macroeconomic stability, strengthening the medium and long-term "driving forces" of economic development - the modernization of human capital, the expansion of the digital economy and full economic sovereignty.

The following five National Priorities for the socio-economic development of the country should be implemented in the next decade:

  1. Sustainably growing competitive economy;
  2. Society based on dynamic, inclusive and social justice;
  3. Competitive human capital and space for modern innovations;
  4. Great return to the liberated territories;
  5. Clean environment and "green growth" country.

 These National Priorities are also of particular importance in fulfillment of commitments arising from the United Nations "Transforming our world: the 2030 Agenda for Sustainable Development."

 

  1. SUSTAINABLY GROWING COMPETITIVE ECONOMY

In the long run, economic growth must be healthy and balanced that will create a solid foundation for the country's sustainable development. The following two goals must be achieved for the effective implementation of this priority:

- sustainable and high economic growth;

- stability against internal and external impacts.

1.1. Sustainable and high economic growth

Economic growth is one of the main factors affecting the lives of citizens. A high-rate per capita national income must be achieved in the country by developing the economy sustainably and at a high pace. Economic growth should ensure an annual improvement in living standards by creating high-income jobs.

New "driving forces" must be found for sustainable economic growth, deep diversification of the national economy, and the full realization of the export potential of goods and services. Although the oil sector is one of the pillars of socio-economic development, the non-oil economy must become the center of development.

Economic growth must be based on advanced and effective private initiatives, and public-private partnerships must be strengthened. The activity of the innovative private sector should be revived, and the share of the private sector in financing the non-oil sector should be increased.

In order for the private sector, especially small and medium enterprises, to become a major source of economic growth and employment, the business environment must be significantly improved, transparency in the judiciary must be increased, and unfair competition must be prevented. A new and transparent privatization strategy must be implemented. The economic efficiency of business promotion mechanisms should be increased. Tax and customs policy should serve to stimulate entrepreneurship, while creating adequate opportunities to ensure state budget expenditures.

The development of the capital and insurance markets, which are the main source of long-term investment resources in the economy, must be accelerated. The stability of the national banking sector must be ensured, confidence in it must increase, the share of banks in financing the real economy must be increased and the development of entrepreneurial activity must be stimulated. Real working mechanisms should be put in place to ensure the accessibility of bank loans for entrepreneurial activities, and bureaucratic barriers to the provision of bank loans should be eliminated.

It is necessary to ensure the attraction of foreign direct investment in the country's economy, including strategic investors in infrastructure. However, in this case, the protection of national interests of the country and the effective regulation of investment by creating a competitive environment for foreign investors should be in the focus of attention.

The economic efficiency of public investment and the activities of state-owned companies must be increased, and the level of transparency in this area must be increased. The basis must be created for state-owned companies to operate on commercial principles, corporate management standards must be applied taking into account international best practices, and profitability levels must be increased.

The shadow economy must be minimized, and the level of transparency in the private and public sectors must be brought to the highest standards. The application of a modern culture of corporate behavior in economic management should be expanded and encouraged, the fight against corruption should be strengthened, and a modern civil service system and ethics should be formed to meet new challenges.

 

1.2. Stability against internal and external impacts

As our national economy is an integral part of the global economy, it can be affected by the external environment. Therefore, in the long run, the economy's stability against internal and external impacts must be strengthened, and macroeconomic stability must be further strengthened. In order to strengthen macroeconomic sustainability and stability in the country, a fiscal framework based on the budget rules should be formed in accordance with the new realities.

Only diversified economy can be sustainable. The main goal is to increase the share of the non-oil sector in the economy.

One of the pillars of stability against the external impacts is the state's foreign exchange reserves, and the other is disciplined borrowing. In order to maintain foreign exchange reserves at a stable level, the share of transfers from the State Oil Fund in the state budget should be gradually reduced. Total debt should serve macroeconomic stability, including the stability of the state budget. Domestic debt management should support the development of financial markets in the country, maintain a stable level of foreign debt, strengthen control over the indebtedness of state-owned companies, and organize public and quasi-public debt management on this basis.

Low and stable prices, which are the main criterion of macroeconomic stability, must be ensured. Such stability should improve expectations in the economy, protect the savings of the population from depreciation and increase investment. Price stability must be ensured through more efficient anchoring. Sustainable financial stability, another important criterion of macroeconomic stability, must ensure that financial markets continue to operate efficiently and effectively, increase financial depth and expand access to finance. The institutional framework of management ensuring the macroeconomic and financial stability needs to be improved.

 

  1. SOCIETY BASED ON DYNAMIC, INCLUSIVE AND SOCIAL JUSTICE

Sustainable and high economic growth should serve the formation of a dynamic and inclusive society, and every citizen should feel this development in his life. People's access to economic opportunities must be equal and fair, regardless of their social status and area of residence. This priority can be successfully achieved based on the following three goals:

- benefiting every citizen from the development;

- high and fair social security, inclusive society;

- balanced development of the capital and the regions.

 

2.1. Benefiting every citizen from the development

Not only economic growth, but also the social welfare of all members of society is an important factor for high development. As the economy develops, the wealth and income of citizens, including salaries, must be increased and a decent level of salaries must be ensured, and the growth of wages must be in line with the growth of labor productivity.

Increasing incomes in the country should create wider economic opportunities, achieve effective employment and decent work for all groups of the population, and improve women's access to economic opportunities in particular.

Necessary incentives should be created to increase the share of the private sector in employment, and the share of private sector employers should dominate in the number of hired employees.

Sustainable economic development must ensure a fair distribution of income and increase the socio-economic well-being of the low-income population. The volume of informal employment should be determined and comprehensive measures should be taken to prevent it and to legalize income.

2.2. High and fair social security, inclusive society

All stratas of the country are an integral part of society and the state must take care of them. Minimizing poverty and low unemployment in the country, as well as expanding the scope of targeted assistance to meet the needs of the poor, create additional opportunities for social protection of citizens.

By making the social security system more effective and fair, the social protection and social security of the low-income and vulnerable groups, people with disabilities, including children under the age of 18 with poor health, should be strengthened. To this end, the country must achieve a decent level of minimum amounts of pensions, benefits, stipends and other social payments. For the long-term development of the pension system, its financial stability must be strengthened, and the proportion of the amount of pensions to the insurance premiums paid must be increased.

The required social rehabilitation infrastructure for persons with disabilities, including children under the age of 18 with porr health, should be accessible, employment support programs should be expanded, and social security should be strengthened. A system of social services that meet the interests of socially vulnerable groups and create equal opportunities for them must be provided.

2.3. Balanced of the capital and the regions

In the past period, the capital of our country has developed faster than the regions. In the long run, our main goal is to bring the development of the regions in line with the level of development of the capital. All necessary economic and social infrastructure has been created in the regions for this purpose.

In order to further increase economic activity in the regions, the existing labor force and all resources must be fully involved in economic turnover. The rapid development of the regions must be accompanied by people's access to quality economic opportunities and physical infrastructure. Regions should have living standards comparable to the capital. This will increase the share of regions in national income.

 

  1. COMPETITIVE HUMAN CAPITAL AND SPACE FOR MODERN INNOVATIONS

In the context of the recent revolutionary technological changes in the world economy, international competition has increased. Prospective life will be characterized by deep digitalization, active application of new technologies and rapid development of the most modern fields without human intervention.

In order to be ready for growing competition in the world in coming years, the priority of each country is to form a highly competitive human capital. Modern education, productive conditions that promote innovation and human health are the main conditions for this.

To successfully implement this priority, the following three goals must be achieved:

 - Education in accordance with the requirements of the 21th century;

- creative and innovative society;

- healthy lifestyle of citizens.

3.1. Education in accordance with the requirements of the 21th century

In order to keep up with the growing competition in the world, the long-term development of the economy must rely on modern and strong education. The share of human capital in national wealth must be sustainably increased just through the education. In the strategic period, special attention should be paid to "lifelong learning" based on the harmonious development of competencies, social skills and abilities. The scope of early and preschool education should be expanded and gradually covered to all children of appropriate age.

In order to strengthen general education, which is the guarantor of the development of society, the ongoing modernization of the education system must be continued, content reforms must be deepened, and integrative teaching practices must be developed. On this basis, the country's position in international assessments (PISA, PIRLS, TIMSS, ICILS) should be significantly improved.

The education system must focus on teaching digital skills from school age to prepare the younger generation for the next era of digital technologies, giving them new skills, specialties and professions that are fundamentally different from today.

People's access to high-quality education should be expanded, staff training should be adapted to the requirements of the labor market, and internationally certified specialists should be trained as part of measures to develop the vocational training system.

In order to create human capital with high professional skills through strong education, the quality of international competitiveness of higher education institutions must be ensured.

3.2. Creative and innovative society

In the future, the digital society, which supports the most modern technological areas and innovations, will become a leading force in development. An ecosystem that stimulates creative and innovative society must be built to develop the country’s competitiveness.

The ecosystem to be established in the new period (relevant incentives, incubation and acceleration centers, public-private partnership financing models, venture and crowdfunding institutions, etc.) should be aimed at increasing the technological capacity of the economy. Prospects must be created to become a space for technological exports by adapting to the rapid technological progress in the world. To this end, the development of the processing industry should be deepened, and the development of knowledge-intensive and high-income medium and high-tech industries should be ensured. Competitive funding mechanisms should be established to promote effective research.

3.3. Healthy lifestyle of citizens

The longevity and healthy lifestyle of citizens must be ensured. This is important for increasing the productive activity and social welfare of citizens. Health and longevity will directly depend on the quality of the health care system in the country. The share of quality health services in the formation of national income should be increased by achieving high results in the application of modern innovations in health.

The increase in life expectancy should be achieved through quality health and a healthy lifestyle.

  1. GREAT RETURN TO THE LIBERATED TERRITORIES

Ensuring the territorial integrity of Azerbaijan has a magnificent place in the centuries-old history of our people. By restoring state borders, the people of Azerbaijan have achieved the greatest military and diplomatic victory in the last century. In order to perpetuate the victory, the return of people displaced from their native lands must be ensured. This Great Return will be a bridge for the sustainable settlement of our citizens in the liberated territories and for the integration of these territories into the economic activity of the country.

The restoration of a new international and regional transport and logistics corridor in the region will increase the country's access to global markets, as well as give a significant impetus to the development of liberated territories.

As in the past, the security of people returning to the liberated territories must be ensured, and the region must become one of the most prosperous parts of the country. In order to restore a decent life, which is the basis of modern life, construction must be achieved in all areas. This should be done on the basis of incentives and the development of public-private partnerships. Only in such conditions it is possible to ensure the full integration of the liberated territories into the great future of Azerbaijan.

For the successful implementation of this priority, the following two goals must be achieved:

- sustainable settlement;

- reintegration into economic activity.

4.1. Sustainable settlement

The restoration of Azerbaijan's historical territorial sovereignty has created a new stage for the population to return to their native lands and live. Sustainable settlement must be ensured in the liberated areas. To this end, these areas must become the healthiest, most modern and prosperous living environment for society, creating a comfortable living environment based on modern principles for sustainable settlement.

The creation of comprehensive safe and favorable living conditions will be of great importance for the permanent settlement of citizens. To do this, decent housing, modern infrastructure, a comfortable lifestyle and access to modern services must be built in new areas. Efficient use of the economic potential of the region should ensure the level of settlement of the population to the pre-occupation level.

4.2. Reintegration into economic activity

The historical position of the liberated territories in the economic and social life of the country must be restored. The new region must become one of the leading links in economic activity and have the same level of development as other regions of the country. The sustainable development of the region will depend on meeting the needs of the economy with the right resources, and the abundance of natural resources and the gained historical image will allow attraction of investment in these areas.

By providing a solid foundation for life, we can bring the region's share of the country's economic activity to pre-occupation levels and increase it sustainably. In this process, it is important to comprehensively promote private initiatives based on the necessary incentives, as well as the development of public-private partnerships.

 

  1. CLEAN ENVIRONMENT AND "GREEN GROWTH" COUNTRY

Given the scale of global climate change, it is important to apply environmentally friendly technologies, the use of clean energy sources, waste recycling and the rehabilitation of contaminated areas should be encouraged. This will be an important contribution to efforts to maintain greenhouse gas emissions in line with international standards.

Along with the perspective economic development of the country, it is necessary to ensure the health of the environment, rapid restoration and growth of greenery, efficient use of water resources and sustainable energy sources. Within this priority, the following two goals must be effectively achieved in the strategic period:

 

- high quality ecological environment;

- green energy space.

5.1. High quality ecological environment

The country must maintain a quality and clean environment and ensure the efficient use of resources. The focus should be on a comprehensive solution to environmental problems that have arisen for many years and sustainable development in this area.

The risks to the environment from economic and demographic growth must be reduced in coming years. For this purpose, the share of greenery in the total area of the country should be increased.

The ecological environment must be balanced with economic growth. Our existing resources must be restored by bringing unusable land into circulation. The country's demand for quality water must be met through the efficient use of water resources.

5.2. Green energy space

In the strategic period, the use of alternative and renewable energy sources will increase, especially in advanced countries. Taking this into account, the country should use energy efficiently and give preference to new sustainable energy sources.

In order to fully meet the needs of present and future generations, the use of environmentally friendly "green" technologies should be expanded. Based on the scientific and technical potential, the share of alternative and renewable energy sources in primary consumption in all sectors of the economy should be increased and the impact on climate change should be reduced. The use of environmentally friendly vehicles will have a positive impact on the environment and air quality.