Page 42 - Azerbaijan State University of Economics

V.Bayramov: Economic diversification policy in context of Azerbaijan's accession

to the WTO
transition period. In fact, WTO policy is only to commit the government to
implement strategies for a prudential tariff policy in the future. This would allow the
Azerbaijani government to not decrease the tariffs dramatically after accession. At
the same time, it should be noted that, once WTO regulations take full effect, the
accession would dramatically increase the pressure for a more diversified economy
to avert negative welfare implications.
Alongside the domestic manufacturing industry, a more diversified economy
can also be achieved by increasing agricultural production. Diversification of the
economy, in this case, is the key to all expected disadvantages. Some types of
subsidies will be impermissible under WTO regulation. Azerbaijani farmers fear that
after WTO accession, they will lack the financial means previously granted through
government subsidies to compete with cheaper agricultural products from abroad.
Again, whether the agricultural sector will benefit or lose from WTO accession will
depend on how competitive the industry will become during the transition period
when certain agricultural subsidies can still be carried out [5].
For the time being, in Azerbaijan, there is a lack of specialized experts in the
service market. The securities market has not developed yet. By international
standards, the Azerbaijani banking system is not competitive and is of minor
importance in the international financial markets. Lack of competition hinders the
development of new financial products and innovations. Again, the Azerbaijani
finance industry has to rapidly adjust to a new market environment to compensate
for a potential drop in oil revenues. The WTO accession will increase competition
from foreign companies in this sector, too.
Reference
[1] Computable General Equilibrium Modeling: İnfluencing Debates, June, p 110-114
[2] Regional Economic Diversity and Regional Economic Stability: Research Results
and Agenda,International Regional Science Review, p. 156-175, October 2013
[3] Bernhard Pfaf, VAR, SVAR and SVEC Models: Implementation Within R
Package vars, Journal of Statistical Software, p 35-45, 2010
[4] Akio Matsumoto, Ugo Merline ad Ferenc Szidarovsky, Some notes on applying the
Herfindahl-Hirschman Index, University of Arizona Press, pages 120-145, 2010
[5] Merlin Hackbart and Donald Anderson, On Measuring Economic
Diversification, Land Economics Journal, vol 54, February, p 86-120, 1978

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