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