Page 52 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.76, # 2, 2019, pp. 46-55

government should continu e its investments in massive infrastructure projects
which is prerequisite to the development of national economy and development.

ADOPTION OF THE FREE-MARKET ECONOMY
Adoption of the free-market economy is key theories of economic development on the
eve of the Post-Washington consensus. However, developing countries are cautious
about accepting this model as a threat that may destroy their infant industries. The
approach also needs the development of technological superiority and business
potentials of the country so that its firms and products can be resilient to the global
competition. Accepting this model as a policy recommendation will be good for
Azerbaijan in the long-run, as it will encourage firms in Azerbaijan to increase their
global competitiveness through a quality-based transformation and technological
advancements. The approach might be found risky for Azerbaijan as it might destroy
local companies and financial system which lack competitiveness, but leads to
development in the long-run growth (Baku Research Institute, no date). However, in
spite of its riskiness, the approach must be accepted by the Azerbaijani government if it
wants to stimulate its firms intending to engage in global trade with its non-oil exports.
Furthermore, simplification of export standards must be applied, and all costs associated
with the export of non-oil exports must be compensated on the part of the Azerbaijan
government. Acceptance of free market model and increasing of competitiveness will
facilitate the Azerbaijan’s integration to the world economy (Muradov, Hasanli,
Hajiyev, 2019: 1170). Furtmore, it is worthy to note that competition increases the
application of technologies and innovations. Almaz and Hajiyev (2004: 4) argues that
“Azerbaijan's economy would be better off if existing uncompetitive sectors could be
replaced with competitive new sectors or the expansion of existing competitive ones”.

FISCAL, MONETARY, TRADE AND INVESTMENT POLICIES
The free market economy requires not only rationalization and optimization of firm
costs but also the optimal implementation of the government's fiscal policy. Funding
of development of the sectors with a competitive advantage in Azerbaijan must be a
part of fiscal policy in Azerbaijan, while the application of trade policy based on the
elimination of all barriers for non-oil exports can be recommendable based on the
case of the UAE. Policy lesson from the UAE can also be drawn from the
investment policy of the UAE. Trust and simplicity of doing business are extremely
important for western investors from the global point of view. Together with country
branding, the creation of trust and simplicity of doing business both in its already
created industrial zones as well as in the overall country can be very important from
the point of view of effective trade and investment policy. Investments in the sectors
of the national economy with comparative advantage of Azerbaijan can bolster the

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