Comparative Advantage of Azerbaijan

One of the most predominant principles of international trade is the comparative advantage theory, developed by the British economist David Ricardo in the early 19th century. To put it simply, the theory argues that a country can boost its welfare if it specializes in certain products in which it has comparably lower cost of production (in other words, lower opportunity cost) and then trade with others. Keeping this principle in mind, one may wonder, in which products Azerbaijan can have comparative advantage and how can we use that to maximize our national well-being?

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How much is Azerbaijan integrated into the world?

When the global economy was facing a relentless recession in 2008 – 2009 period, Azerbaijani economy was still doing well enough with annual GDP growth of ~10%. Naturally, one may wonder, how come Azerbaijani economy did not went under a recession (or at least stagnation of economic growth) if there was a global crisis going on?

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Protectionism or Free Trade?

A while ago I came across a news story about imported potatoes. With the decision of Cabinet of Ministers, the tariffs on potatoes are doubled, from the previous rate of 15% to 30%[1]. This might not be a binding decision, because as Minister of Agriculture, Inam Karimov himself mentioned, Azerbaijan’s potato production is two times more than its consumption[2]. Considering this statistic, how does the new law fit in? and overall, what is going on with protectionism in Azerbaijan?

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Foreign Trade of Azerbaijan: A Shadowed Deficit

A couple of days ago I read online that Azerbaijan’s imports during July 2018 was the highest of the year so far[1]. We all know that Azerbaijan primarily imports things like vehicles, telephones, laptops etc. but still couple of questions came to my mind. Particularly, how does our trade balance look once we take oil/gas exports out of the equation?

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