NDUSTRY IN COMPETITION

The long-term policy of the government of Azerbaijan is aimed at stimulating the development of the most competitive industries and promoting domestic products on world markets. And the importance of implementing effective initiatives within the framework of this policy prompted Azerbaijani President Ilham Aliyev at the beginning of this year to declare 2014 a Year of Industry. It is coming to an end soon, and we can already assert that over a short period, steps were taken, which will undoubtedly contribute to the development of prospects of many industries.

Aspects of the industrial strategy of Azerbaijan were discussed in Baku at the international industrial conference "Industrialization in the 21st century: The main trends, modern approaches and best practice experiences in industrial policy".

The modernization of the non-oil industry began during the large-scale privatization that started in the late 1990s and the implementation of several state programmes, particularly on the socioeconomic development of regions. The favourable investment climate, the sufficiently high capacity of the rapidly growing domestic market, as well as government efforts to turn oil revenues into the development of non-extractive industries contributed to the formation of the country's industrial complex meant for the production of import-substituting products. These favourable factors combined made it possible to create more than 20,000 new businesses in the country in a relatively short period of time. The food industry and processing of raw materials for the garment and leather industry, production of construction materials, furniture, electronic equipment, assembly of trucks and agricultural machinery, shipbuilding and petrochemicals, ferrous and non-ferrous metallurgy - this is an incomplete list of the fastest growing spheres in the past 10 plus years.

"The basic fundamentals of the industrial policy of modern states are based on the principles of competitiveness, knowledge-intensive production, technological efficiency and environmental safety," Azerbaijani President Ilham Aliyev said in his welcoming letter to the participants in the conference. "Numerous infrastructure projects, efforts to diversify the economy and ensure macroeconomic stability, as well as government support for private entrepreneurship and investment activity became effective tools for the formation of a modern industrial base in our country. At this stage, the top priority of the state is the further development of the policy of new industrialization and increasing non-oil exports."

What are the mechanisms and tactics of the industrial policy of the Azerbaijani government in the near future?

The strategic goal of economic development for the next decade is the formation in the country of a competitive, high-tech non-resource-based production, which provides 80 per cent of GDP. And about half of the total exports of the country should be provided by products with high added value. "A key tool of the programme of new industrialization being implemented in Azerbaijan is the formation of multi-profile technology parks, business incubators, industrial estates, as well as the introduction of innovative, science-intensive technologies," said Azerbaijani Minister of Economy and Industry Sahin Mustafayev who participated in the industrial conference.

Over the past decade, the share of industry in GDP increased from 38 per cent in 2003 to 48 per cent in 2013. On the whole, industrial production increased by 2.7 times, including the production of construction materials - 2.5 times, production of electrical equipment - 2.1, metallurgical industry - 2.2 and the production of clothing - 2.5 times.

In the short-term, it is planned to increase this potential even more. So, in the next three years, a metallurgical complex will be commissioned in Azerbaijan, including five plants in Ganca and Daskasan District, with an annual steel production capacity of about 1m tonnes. To this end, in April last year, the head of state decreed the creation of CJSC Azerbaijani Complex for the Production of Steel; this structure will provide a closed production cycle - from mining and processing of iron ore to the production of rolled steel. "In the near future, work will start to build a glass factory, and it is also planned to build a plant for the production of polymers, a carbamide plant, and in the longer term, the region's largest oil and gas refining and petrochemical complex will be created in Qaradag district," said Mustafayev. "Recently, industrial parks have been actively developing in Azerbaijan: the Sumqayit and Balaxani industrial parks are operating, a high-tech park and a chemical industrial park are being created. It is planned to establish modern industrial estates in Ganca, Mingacevir and Qaradag district of the capital."

The industrial potential of Azerbaijan, which has grown several times over, and the effectiveness of state industrial policy have repeatedly won high marks from international experts. "We are convinced that modern industry will create preconditions for a new technological breakthrough, ensure the sustainable development of society and help to implement the Azerbaijan 2020 concept, and most importantly, it will give an impetus to raising living standards and reducing poverty," Secretary General of UNIDO (United Nations Industrial Development Organization) Li Yong said in a special video message to the participants in the event.

In recent years, Azerbaijan has made highly successful progress in economic development, as well as in institutional reforms and the environment, UN Resident Coordinator Antonius Broek said, stressing that Azerbaijan has set itself the goal to move as soon as possible from the category of middle-income countries to the level of highly developed countries that form an economy of knowledge. "In the world there is not a single country that could ensure sustainable socioeconomic development without developing small and medium-sized enterprises and without creating an industrial cluster. In this context, we should welcome the efforts of Azerbaijan in business development and in the use of modern technology," Broek said, expressing confidence that the conference will support the sustainable development of industry and exchange of experience in this field.

Another outcome of the conference was the signing of a framework agreement on cooperation in 2014-2018 between the Ministry of Industry and Economy of Azerbaijan and UNIDO.