Azerbaijan Becomes an Attractive Hub with Its Rapidly Growing Economy and Advantages for Foreign Investors

Oil and Gas Account for 90% of Azerbaijan's Foreign Trade Policy. Turkey Ranks First Among Foreign Trade Partners. Bilateral Trade Volume Reaches USD 1.46 Billion. Azerbaijan is the largest Eurasian country in the South Caucasus by area. Located particularly on routes that have historically carried the riches of the east to the west over centuries, Azerbaijan possesses exceptional cultural wealth. To the east of the country lies the Caspian Sea, to the north Russia, to the northwest Georgia, to the west Armenia and to the south Iran. Both its geopolitical position and the abundance of its natural resources give it a broad field of activity in the global economy. With its independence in 1991, Azerbaijan began to operate its rich oil reserves and became a focal point of investor interest from other countries. Chemical industry enterprises spend considerable energy even in single-product manufacturing. Considering that the development of the country's chemical industry is tied to oil and natural gas reserves, we can clearly see that Azerbaijan's chemical industry has progressed rapidly from 1991 to the present. The foundations of chemical factories (particularly synthetic rubber) in the city of Sumgayit in Azerbaijan began to be laid around the 1930s. In the years following 1945, heavy industry branches began to develop in this region. Petrochemicals produced in Sumgayit were exported to many locations of the Soviet Union in the 1970s. Today, Azerbaijan, producing chemical products of high quality under various brands, manufactures polyethylene, propylene, propylene oxide, propylene glycol, pyrolysis tar, caustic soda, chlorine and technical sulfuric acid. Among the countries to which it exports these products are Poland, Romania, Iran, Turkey, Georgia, the United States, the United Kingdom, Germany and Russia.

Azerbaijan: Rich in Natural Resources

Alongside its developed industry, Azerbaijan hosts some of the world's largest oil and natural gas reserves, particularly in the Azeri Chirag Gunashli and Shah Deniz fields located off the Caspian Sea coast. Thus, with large oil and natural gas reserves and raw material deposits, it ranks among the world's notable countries. Socar, the state oil company of Azerbaijan, accounts for 20% of the country's total oil production. Total oil reserves reach 3.3 million barrels. Looking at previous years, there was steady growth in oil production in 2002 and 2010. Daily production was increased from 315,000 barrels to 1 million barrels, but due to technical problems occurring after 2010, production declined to 932,000 barrels. The oil industry and petrochemicals form the foundation of the country's heavy industry. The vast majority of Azerbaijan's exported products consist of oil and oil derivatives. In particular, oil, mineral oils, LPG, mineral oils, mineral fuels, plastics and plastic products are the most exported items in this category. In addition, the foundations of the ancillary industry are provided by metallic minerals (iron, copper, zinc, lead, aluminium). Particularly due to its geographic location, Azerbaijan, which possesses rich underground resources, ranks among the world leaders in the export of ferrous metals and chemical raw materials. Looking at the products Turkey exports to Azerbaijan, motor vehicles, aircraft and components, and furniture are among the main products. Commercial agreements concluded between the two countries in recent years have positively affected the export and import ratios between them. When we consider the economic momentum Azerbaijan has gained over the past 5 years, we can clearly see that it ranks among the world's leading countries in exports.

Foreign Trade Determined by Oil and Natural Gas

In Azerbaijan, where energy is the most fundamental element of foreign trade policy, natural gas and oil exports account for 90% of the share. An 80% share is in imports. Based on an assessment from 2016, exports were USD 9.1 billion and imports were USD 8.5 billion, while total foreign trade volume was around USD 18 billion. Among Azerbaijan's foreign trade partners, Turkey ranks first. In 2016, bilateral trade volume between Turkey and Azerbaijan rose to USD 1.46 billion, while trade with Turkey constituted 12.88% of Azerbaijan's total foreign trade. Turkey's investments in Azerbaijan amount to approximately USD 9 billion, a significant figure. More than 2,600 Turkish companies operate here, providing employment for over 25,000 people in the telecommunications, banking, transportation, food trade, construction materials and textile sectors. In Turkey, approximately 1,771 companies with Azerbaijani capital are operating, and Azerbaijan's investments exceed USD 4 billion. Political stability and rapid growth in the country in recent periods are opening the way for foreign capital to make long-term investments in Azerbaijan. In Azerbaijan, with the protection of investors' profits and rights, the inviolability of property and the provision of equal opportunities to local and foreign businessmen, a legal foundation has been established in investment and economic matters. Turkey and Azerbaijan have signed important projects and partnerships such as the Baku-Tbilisi-Ceyhan (BTC) oil pipeline, the Baku-Tbilisi-Erzurum (BTE) natural gas pipeline and the Baku-Tbilisi-Kars (BTK) railway. The relationship between the two countries has been strengthened through 23 documents signed in the economic sphere. With the Afghanistan-Turkmenistan-Azerbaijan-Georgia-Turkey Transit Transportation Project (Lapis Lazuli), the aim is to create a transit corridor extending from Afghanistan-Turkmenistan-Caspian Sea-Azerbaijan and Georgia to Europe through the Strait bridges or via the Baku-Tbilisi-Kars railway and the Eurasian Tunnel.

Among Azerbaijan's foreign trade partners, Turkey ranks first. In 2016, bilateral trade volume between Turkey and Azerbaijan rose to USD 1.46 billion, while trade with Turkey constituted 12.88% of Azerbaijan's total foreign trade.

Turkey was the first country to recognize the Republic of Azerbaijan when it declared independence in 1991. Diplomatic relations have continued to be maintained with strong ties from 1992 to the present. Relations between Turkey and Azerbaijan are strategic and multidimensional. In 2010, the High-Level Strategic Cooperation Council (HLSCC) was established to strengthen the existing relationship further. The council, which has been held 5 times from 2010 to the present, most recently took place in March 2016 under Turkey's auspices. The council aims to strengthen cooperation and ensure its continuity on regional and global levels. Through meetings conducted with Azerbaijan such as Turkey-Azerbaijan-Georgia, Turkey-Azerbaijan-Iran and Turkey-Azerbaijan-Turkmenistan, many important initiatives have been undertaken for the peace and prosperity of these regions.

Environmental Awareness Not Overlooked as Industry Develops

Azerbaijan, with its wealth in natural resources and developing industry, is taking many measures to protect the environment. Azerbaijan's environmental protection policy actually dates back to when it declared independence. It has signed numerous agreements on this matter. And continuing to fulfil necessary responsibilities with environmental awareness remains an important part of its policies. The Ministry of Environment and Natural Resources of Azerbaijan, established by the President of Azerbaijan on 23 May 2001, pursues state policy for the protection and continuance of underground and above-ground resources, water, energy sources, vegetation and air. In line with this objective, the budget allocated by the state to protect the environment has doubled. Over the past 10 years, Azerbaijan has implemented projects by spending high budgets to preserve the ecological cycle. The national programmes "On Ecologically Sustainable Socio-Economic Development" and "On the Restoration and Increase of Forests" approved and implemented in 2003 have been followed by the continuation of environmental protection as state policy. Prepared by: Çağla Köksal Sources [1] http://www.azerbaijans.com/content_1614_tr.html [2] https://tr.wikipedia.org/wiki/Azerbaycan#Tarih.C3.A7e [3] http://sedatreisturan.blogcu.com/azerbaycan-az-rbaycan/2423797 [4] http://www.enerjigunlugu.net/icerik/4544/azerbaycan-turkiye-iliskilerindeenerjinin-rolu.html [5] http://politikaakademisi.org/tag/baku-tiflis-erzurum-dogal-gaz-boru-hatti/ [6] http://www.ekonomi.gov.tr/portal/faces/blog/newsDetail?news [7] http://www.mfa.gov.tr/azerbaycan-ekonomisi.tr.mfa [8] http://www.aljazeera.com.tr/ulke-profili/ulke-profili-azerbaycan [9] http://www.tuik.gov.tr/PreTabloArama.do?metod=search&araType=vt