ISET Economist Blog

A blog about economics in the South Caucasus.

Azerbaijan Economy and the Oil Prices: a Blessing in Disguise?

International crude oil prices, which have hovered at $110 per barrel for the last three and a half years, started a sudden and abrupt downfall in August 2014, reaching a $50 per barrel mark in just five months. More than a year after the event, it looks like the oil price of $50 per barrel is here to stay, at least for the foreseeable future. BLAME THE TECHNOLOGY The primary reason behind the drop was undoubtedly the technological advances in shale oil and gas extraction in the United States – a boom so big, that the US is now poised to become a net ene...
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Guest — LashaNikolaishvili
The resource curse
Wednesday, 14 October 2015 9:09 AM
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Georgia, Armenia and Azerbaijan Agree to Form Transcaucasian Confederation by 2019

1 April, 2014, ISET Economist's special correspondent in Geneva. The ISET Economist was invited to attend the signing ceremony concluding the last round of trilateral negotiations held in Geneva under the joint sponsorship of the Swiss Confederation, the US, Russia and Turkey. The three countries, represented by heads of states, agreed to join the newly created Transcaucasian Confederation and thus bring peace and a promise of prosperity to a deeply divided region that has provided the setting for yet another round in the Great Game – the battle between ...
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Guest — Zak
no jokes?
Friday, 04 April 2014 12:12 PM
Guest — Eric
Dear Narek, if/when TC is formed (and then dissolved), we shall all become citizens of the world, Insha'Allah!!! On a more serious... Read More
Friday, 04 April 2014 4:04 PM
Guest — Narek
History repeats itself. No one takes lessons from it. When the same confederation was created in 1917-1918 it had life of less tha... Read More
Friday, 04 April 2014 3:03 PM
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Looking Over the Border: Immigration to Azerbaijan

Since some years, Azerbaijan experiences an immigration wave. Chart 1 shows the net immigration (immigration minus emigration) to Azerbaijan during the last 22 years. As can be seen, in every year since 2008 more people are immigrating to Azerbaijan than there are emigrating. In 2012, for instance, 2000 net migrants came to Azerbaijan. Migration flows are governed by economic, social, and political motives. One may categorize these to be either pull factors or push factors. Push factors are typically the lack of economic opportunities in the countries of...
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Reforming Vocational Education in Azerbaijan: Back to Future?

Baku today is very different from the Baku of my high school years. I remember riding a tram to school. I also remember my high school sharing a building with a vocational school. Nowadays, you will find neither trams nor well functioning vocational schools in Baku. Although I am not sure about the former, there is increasing evidence, both anecdotal and systematic, that Azerbaijan needs to rejuvenate the latter. In this post I argue that prioritizing Vocational Education and Training (VET) reform may prove to be an important step toward tackling the so-...
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Guest — Eric Livny
In fact, according to available OECD and UNESCO Institute of Statistics data, Georgia is doing much worse than Azerbaijan in terms... Read More
Wednesday, 26 June 2013 1:01 PM
Guest — Vusal Mammadrzayev
Actually, the level of vocational education is not in the desired level in Azerbaijan and does not meet the demands of the labor m... Read More
Thursday, 27 June 2013 10:10 AM
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Is Some Degree of Corruption Good for Growth? – It Could Be.

It is a commonly accepted view that corruption is bad for economic growth. It leads to an inefficient allocation of resources by contradicting the rules of fair competition and by setting wrong incentives. Patronage and bribery are two components that define the notion of corruption and which cause the inefficiencies associated with it. Patronage often leads to the unfair delegation of the power of decision making to economic agents who do not posess the relevant skills to make good decisions. In the absence of patronage, ceteris paribus, the power of de...
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Guest — Nino
The last part about the region reminds me of the prisoners' dilemma __ if everybody else is corrupt, maybe it is better to be corr... Read More
Friday, 15 February 2013 10:10 AM
Guest — Florian
Is it prohibited for Georgian entrepreneurs to pay bribes abroad? Georgia should reconsider that rule. Until a few years ago, Germ... Read More
Friday, 15 February 2013 2:02 PM
Guest — Eric
Giorgi,I agree with the discussion in your blog up to the point where you make the link to Georgia. The thumb rule provided by Hec... Read More
Friday, 15 February 2013 4:04 PM
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A Comparison of Unit Labor Costs in Georgia, Armenia and Azerbaijan

Wages and productivity levels differ across countries. For instance, in 2011 the average yearly income in the US was about $53 000, whilst the same indicator was $250 in Madagascar.  Clearly then, Madagascar has a competitive advantage in labor cost over the US. But the issue is not so simple because workers in the US operate in a completely different environment (with better capital facilities, more educated colleagues, higher level of technologies, etc.) that determine a much higher productivity level. Higher wages can positively affect productivi...
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Guest — NP
Some of these statements and figures would need a deeper explanation (even just to answer to the questions you are raising). For e... Read More
Thursday, 17 January 2013 10:10 AM
Guest — Giorgi Balakhashvili
While Turkey is our main trade partner, it would be very interesting to assess the ULCs compared to Turkey as well.
Thursday, 17 January 2013 11:11 AM
Guest — Giorgi Machavariani
There are different methodologies for calculating ULCs. In this investigation, they are computed as a ratio of hourly compensation... Read More
Thursday, 17 January 2013 12:12 PM
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