Page 95 - Azerbaijan State University of Economics

Bahruz Babayev: Main Directions of the Non-Oil Export Sector in Azerbaijan
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The Decree of the President of the Republic of Azerbaijan on the approval of the
“State Program for Industry Development in the Republic of Azerbaijan for 2015-
2020” was approved in 2014, and the same year was declared the “Year of Industry”
in Azerbaijan. The main objectives of the state program are to increase the non-oil
export potential, the use of innovations in industrial enterprises, the use of advanced
technologies, the promotion and application of investments in the non-oil industry,
the modernization of industry and the use of infrastructure (2014). The main
components of the state program are strengthening the industry’s competitiveness,
supporting the activity of industrial enterprises, establishment of industrial zones and
clusters, reinforcing human resources and scientific support and advancement of
legislation. The most addressed term used in the strategic roadmap for the
development of heavy industry and mechanical engineering in the Republic of
Azerbaijan is the broad use of the term “support for import substitution”.

It must be mentioned that two basic strategies for industrialization are used when
considering the structure of world trade. One of them is import substitution activities.
The import substitution strategy means that the goods imported to the country are
replaced with products of the domestic industry. Export promotion refers to the
establishment of production for international trade and the strengthening of foreign
trade (Yilmazkuday, 2003: 1). Export promotion refers to the fact that industries can
compete with foreign competitors. The application of export promotion policies has
been very successful in the new industrialized Asian tigers, Hong Kong, South Korea,
Taiwan and Singapore. Since 2010, Turkey has used two industrialization strategies in
the industrialization of the national economy. Turkey is actively encouraging the
export of industrial goods, along with a policy of meeting the demand for industrial
goods at the expense of the local industry. Considering this the application the Turkish
industrialization strategy in Azerbaijan may produce successful outcomes. It is
important to prepare Azerbaijan’s export products for international competititon.

The Azerbaijani industry is a sector that has historic traditions, both in light and
heavy industries. Mechanical engineering, carpet weaving, silk and metallurgy have
historically developed in Azerbaijan. The problems associated with industrial
development include low labour productivity, lack of funding, low marketing and
sales, low innovation activity, poor quality of products and lack of strong business
models. Furthermore, industrialization can also be defined as the main focus for the
non-oil sector in Azerbaijan. The development of the light industry in terms of
developing the export potential of the industry seems to be very promising for
Azerbaijan, where there are quite a rich tradition and raw materials. Azerbaijan can
support traditional light industries by establishing manufacturing facilities and

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