Research Information System
Journal of Economic Cooperation and Development, vol.41, no.3, pp.33-67, 2020 (Scopus)
The longstanding dominance of the extractive industry in Azerbaijan has created a situation that can be understood with the help of the Dutch disease model. The oil boom period (2008–2011) brought high levels of mineral revenue. The chronic overvaluation of the national currency during the oil boom, coupled with an appreciation of real wages in the mining industry that outperformed other sectors—particularly the manufacturing sector—reflect the first two symptoms of the phenomenon. In Dutch disease economies, the increased share of the services sector in the output (the third symptom of the disease) during unrecovered manufacturing (the fourth symptom) leads to a major slowdown in industrial production—also known as de-industrialization. Azerbaijan has suffered from unregulated investments, untargeted policies, and opportunistic behavior that has meant that mineral revenue has been spent rather than saved or redirected toward rebuilding the country’s industrial heritage. This study evaluates the presence of Dutch disease in Azerbaijan using the available statistical data and through comparisons with other resource-rich countries to outline policy recommendations.