Strategies of the Development of Entrepreneurship and SME

5.3 DEVELOPMENT OF THE SME SECTOR IN AZERBAIJAN 36Today the main direction of the political and economic transformation of any country intransition period is the creation of private sector, development of entrepreneurship,establishment of small and medium-sized enterprises, elimination of unfair competition,protection from monopoly, etc.A lot of reforms in different sectors of economy were implemented in the republic in1991, after its independence. All property relations remained from Soviet period was replacedwith new relations related to new free market economy. Only private property forms related tomarket economy were created in the republic and the base of entrepreneurship system werefounded.USD 17.4 billion GDP was produced in the current year, which is 32.5 % (USD 4.2billion) more than it was last year. 72.8% of GDP has been created in production sector of theeconomy. 2,027.5 USD or 30.6% more product per capita was produced this year incomparison with the relevant period of last year. The output of products in industry sector hasbeen increased by 32.7% and run up to USD 14.4 billion and its share in GDP was 60.9% incomparison with the relevant period of last year. 78.8% of industrial products was produced byprivate sector and has been increased by 46.5% in comparison with the relevant period of lastyear. The population income has been increased by 39.7% and run up to USD 9.4 billion andits amount per man has been increased by 38.1% and run up to USD 1,127.5.3.1. SME sector developmentThe priority sectors of Azerbaijan economy which are suitable for establishment ofbusiness relations are production of agricultural products, processing and packaging,construction and construction products, tourism, transport, textile, communication and etc.The beginning of economic achievements in the Republic was 20 September 1994 whenthe “Contract of Century” was signed in Baku. The conclusion of this contract was a signal forsocial and economic stability in the country and this process had a great role in attraction ofdirect foreign investment into the country economy. The volume of investment into theAzerbaijan economy from 1991 till 2007 is USD 42 billion. 70% of this belongs to the foreigninvestment. Generally, USD 4 billion was invested into the economy during 6 months of 2007.The structure of investment on forms of enterprisesTable 21.2004 2005 2006Small enterprises (%) 3,2 3,2 3,2Medium and big enterprises (%) 96,8 96,8 96,8But, besides all these achievements there are a lot of problems in entrepreneurshipdevelopment which are waiting to be solved. They are monopolism, bureaucracy, illegalinspections, unfair competition, lack of financial resources, gap in legislative acts,unemployment and etc. Besides, the dependence of courts, lack of transparency in the activityof state organs, weakness of public control, insufficient application of antimonopoly legislationand other problems cause to burdening of population welfare, discrimination between people,36 Prepared by Prof. Alakbar MAMMADOV, President of the National Confederation of Entrepreneurs (Employers)Organizations of Azerbaijan Republic98