World development report- 2011: Azerbaijan was in group with score above average

Analysis Materials 17 May 2011 10:38 (UTC +04:00)

Azerbaijan is amongst the states where population's income levels exceed the average. This conclusion is contained in the World Development Report 2011, which was published by the World Bank.

Specific level of income for each of the states is not indicated in the report. However, for the group to which Azerbaijan is referred, the established minimum totals $3,946 per capita per year, while the maximum is $12,195.

Most of the statistical data presented in the report relate to the period from late 1990 to 2009. The report says that the gross national income in 2009 reached $42.5 billion, while purchasing power parity (PPP) - $79.3 billion. Particularly, in 2009 gross national income per capita in Azerbaijan amounted to $4,840 and purchasing power parity - $9,030. For comparison, in Armenia, the gross national income per capita in 2009 reached $3,100 and PPP - $5,420, while in Georgia, these figures were respectively $2,530 and $4,700.

According to independent experts, the figures in the estimates of the World Bank are made upon the purchasing power parity of countries, so it is not necessary to take figures in report on the basis of common measures. For example, according to our statistics, the country's GDP is around $51 billion, while upon the purchasing power parity, the gross production of Azerbaijan makes up $80 billion. Here, each country has its own coefficient. Nevertheless, according to the World Bank, the share of the poorest quintile (5th part of household expenditure) in national consumption or income in 1995 - 2008 reached 13.3 percent. In the structure of the gross production, the final consumption of households is 37 percent, general government expenditure - 14 percent.

It is important to note that, according to forecasts of local experts, the GDP growth in Azerbaijan this year will be 3 percent. According to official statistics, in 2010, the country's GDP increased by five percent. It is considered that in 2010 Azerbaijan managed to maintain the GDP growth rate despite the crisis situation around the world.

For example, in the Long-term Economic Development Strategy of Azerbaijan for 2011-2025 years, Azerbaijan's GDP is planned to be increased to the level of $103.6 billion by 2025 from $43 billion in 2009 and $52.1 billion in 2010. In 2011-2025 the average annual nominal growth percentage is projected at 5.7 percent and real growth - 2.6 percent.

According to forecasts, the share of the oil industry in GDP will reduce from 50.9 percent in 2009 and 48.5 percent in 2010 to 13.8 percent in 2025. The share of non-oil industry in GDP is expected to increase from 3.2 percent to 14.2 percent, agriculture - from 7.3 percent in 2009 and 5.4 percent in 2010 to 12 percent in 2025, the service sector - from 38.6 percent and 27.4 percent respectively to 60 percent.

According to the Strategy, the GDP per capita will increase from $4,800 in 2009 and $5,800 in 2010 to $9,700 in 2025. In 2011-2025 the average annual nominal growth rate in percent is projected at 4.5 percent, real growth - 1.5 percent.

The GDP in non-oil sector is expected to increase from $21.1 billion in 2009 to $89.3 billion, the average annual nominal growth rate in percent is projected at 9.4 percent, real growth - 6,2 percent.

According to the strategy, the amount of non-oil GDP per capita will increase from $2,300 in 2009 to $8,300 in 2025. In 2011-2025 the average annual nominal growth rate in percent is projected at 8.4 percent, real growth - 5.2 percent.

As part of this strategy, it is projected that Azerbaijan will come near with the high income countries upon the World Bank classification. Also according to the classification of the UN Development Program, Azerbaijan is projected to approach the group of countries with the highest level of human development. The country is now included in the category of countries with high human development.

Azerbaijan could earlier implement the indicators and forecasts, but the state belongs to the countries in the territory of which there are "hot" conflicts. The Nagorno-Karabakh conflict that gas been continuing since 1995 prevents the active development in the country.

And the World Bank's World Development Report 2011 is mainly dedicated to topics such as conflict, security and development in countries. And the report indicates that the World Bank considers it necessary to develop standards for management of the revenues from sales of natural resources in the countries with "hot" conflicts.

In addition, the World Bank considers it necessary to increase the predictability of aid flows, to provide it on a longer term basis and introduce more flexible mechanisms to maintain peace, including guarantees of support after peacekeeping operations. At the same time, it needs to invest in job creation.

WB also recommends to more actively coordinate financial intelligence services of countries to prevent the transfer of illicit assets. Here it needs to take the initiative rather than reacting to already committed fact. It needs to prevent such a crime rather than reacting to it.

According to the WB, about 1.5 billion people live in areas prone to recurring cycles of political and criminal violence.

In addition, the report indicated how many refugees there are in the world. The report's authors say that their number is estimated at 42 million. According to experts of World Bank, 15 million people were forced to flee abroad, others had to seek refuge in other regions of their countries.

For example, the "Schengen" countries experience a serious problem with illegal immigration and huge influx in European countries as a result of the political crisis in Libya, during a mass relocation of Libyans to Italy, and for some reason they all want to move to France. Currently, the presidents of Italy and France are negotiating to solve this problem.

According to the head of the EU delegation in Azerbaijan Roland Kobia, "Schengen" is currently suffering from its success. "Many people believe that Europe is paradise, but it's not so, although Europe has attracted people like a magnet. Currently, the Schengen countries are experiencing serious problems because of the possibility of free travel. The main problem is the illegal migration, the second problem - a huge influx of migrants, while the third - that many people want to live in Europe," said Kobia.

Thus, according to the WB report, the GDP growth in the countries of the Organization for Economic Cooperation and Development (OECD) in the third quarter of 2010 was 0.6 percent. This figure is less than previous figure (0.9 percent).

It should be noted that according to the report of the organization, the private consumption was the main reason for the growth of GDP. Particularly, the private consumption has added 0.4 percent to overall growth. While public consumption in the aforementioned countries was 0.1 percent. Net exports, in turn, decreased by 0.3 percent. Amongst the 7 major countries, private consumption was the main reason for the formation of GDP growth in Japan. While in the U.S. the accumulation of private consumption was the main reason for the GDP growth.