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Azerbaijani authorities have been actively implementing the Keynesian development model for the national economy, which in principle advocates for intensive intervention of the state in the economy because the free market lacks the effective mechanisms to successfully cope with the crisis.

The theory of the English economist John Keynes is based on an idea that the governments of countries affected by the crisis of the 1930s, or the so called the Great Depression, must be able to influence the market in order to increase consumer demand through the flexible monetary and fiscal policies, expansion of public procurement, and unmediated creation of new jobs.

In fact, the situation in the global economy has changed significantly over the past hundred years. Although the modern Azerbaijan does not experience the effects of the Great Depression but the overall principles of the Keynesian theory may well be applied in the current period as well.

The results of the national convention on the development of the cotton industry in Saatli and the Cabinet meeting on social and economic development during the first quarter of 2017 clearly manifests the parallels between the challenges and measures taken by the Azerbaijani government and the Keynesian theory.

Turnaround in the development of raw materials base

In 2016, for the first time in the new century, the national economy demonstrated a negative growth with a 3.8% decline in GDP. The past year may well be considered a starting point of the new stage in the economic development of Azerbaijan associated with the potential of the national non-oil sector.

A positive yield of the taken measures is quite obvious. As President Ilham Aliyev said at the Cabinet meeting, the non-oil sector of the economy has increased by 2.4%.

"The non-oil industry and agriculture have increased by 2% and 3.5%, respectively. I want to underline that we had a growth in plant growing by more than 20%. This demonstrates that our activities coupled with serious reforms and investments are definitely bearing fruit," said the president. This growth was reflected in the indicators of the foreign trade turnover. During the three months of 2017, the trade and exports have increased by 15% and about 50%, respectively. "We are pleased that our non-oil exports grew by almost 10%, while the imports fell by 17%. This is a manifestation of our policy aimed at reducing the dependence on imports, stimulating the local production, as well as creating excellent conditions for business operations. In particular, we have invested in the purchase of equipment for the agricultural sector," said Mr. Aliyev.

The state intervention in the agrarian sector was necessary primarily for technical agricultural crops. The absence of ties between the farmers and the owners of processing facilities has almost liquidated the highly profitable and labor-intensive crop industries.

First of all, the revival of the cotton growing industry is a strategic priority for Azerbaijan. By the end of 2015, the total area cultivated for cotton was reduced to 18,000 hectares, while the production volume was almost 35,000 tons. It is a shame for Azerbaijan, where the cotton production in the early 1980s reached 800,000 tons.

However, 2016 brought back hopes, when the industry managed to get about 90,000 tons of cotton from ​​51,000 hectares. In 2017, Azerbaijan expects to produce not less than 270,000 tons of cotton grown on 136,000 hectares of land. That is, in just two years, the cotton production can increase eight times.

The development of sericulture is also quite impressive. The overall volume of silkworm cocoons harvested in 2015 and 2016 was 232 kg and 70.7 tons, respectively. In early December 2016, 1.5 million seedlings of mulberry trees imported from China were planted. Seedlings with dense foliage were shipped to farms and planted in 37 regions nationwide. Thus, it is expected that 1,300 tons of silkworm will be harvested by 2019, which is 5,600 times (!) more than in 2015.

The development of raw material base will boost the light industries focused on the production of fabrics, clothing and other products from cotton and silk.

A chain of modern enterprises

The creation of a reliable raw material base for raw cotton and silkworm cocoons has boosted the development of modern enterprises throughout the chain - from cotton growing to processing. It is planned to build a new plant in Imishli. Also, a significant amount of work is to be done at many inactive plants, as in the next two years Azerbaijan is going to harvest 400,000 tons of raw cotton.

Azerbaijan is importing modern and effective pivot irrigation systems. President Aliyev gave necessary instructions for the manufacture of these systems locally.

Another plant in the country will be a pesticide plant. As noted by the president, a fertilizer plant to produce nitrogen-based fertilizers will be launched this year and will completely meet both the domestic and export demands.

In 2016, the foundation of an industrial park with nine separate plants including a spinning mill was laid in Mingachevi. The first enterprises will start operating by the end of 2017.

Undoubtedly, the number of modern plants and factories will grow rapidly and will bring in material profit and will help creating new jobs.

 The social dimension

The social policy of the Azerbaijani government is markedly different from that in a number of European countries, as the population is offered not a social assistance but an opportunity to earn for living.

"Cotton growing is to increase the employment and improve the living standards of the rural population. We invest in this industry oil profits, so that people can live even better, work, earn, live honestly. We create opportunities for good earnings. Therefore, the development of cotton growing for me as a president is first of all a social, then an economic project and only after that a project that brings in the currency," said President Aliyev.

It is already planned to expand the area of land cultivated for cotton to ​​200,000 hectares, which will provide employment opportunities for up to 300,000 people.

By the way, the development of the cotton industry will be profitable for both the rural and urban population. For example, the industrial park in Mingachevir will be able to provide at least 5,000 people with jobs.

It is clear that cotton cannot be grown in all regions of the country. But the state supports the development of the sericulture industry. The entire production chain is reviving: from the mulberry planting and silkworm cocoons to obtaining the strings and, finally, the silk itself. In regions with the coolest climate, hazelnut gardens are laid out, which, along with the opening of new jobs, significantly increases the country's export potential.

Access to new markets

The state support will provide the local entrepreneurs with an access to overseas markets soon and sell not raw materials but the finished products.

Thus, the government is carrying out a policy for the introduction of the Made in Azerbaijan brand to potential foreign buyers. Thanks to exhibitions in Germany, China, the United Arab Emirates and Russia, the Azerbaijani companies were able to present their products under a single national stand "Made in Azerbaijan". The Azerbaijani wines, fruits, vegetables, tea, pomegranate juice, and hazelnut win new markets at the exhibitions. Today, we have agreements with a number of leading trade networks enabling the access of Azerbaijani goods both in the traditional CIS markets and in the Gulf countries.

In particular, Azerbaijani entrepreneurs signed an agreement with Lulu market chain at the international food exhibition Gulfood-2017 held in Dubai in early March 2017. From now on, 138 Lulu stores in the UAE, Oman, Qatar, Kuwait, Bahrain, Egypt, Saudi Arabia, Malaysia, Indonesia, and India will be able to buy Made in Azerbaijan products.

In addition, according to the presidential order, trade houses are being created with trade missions to be launched in Russia, Belarus, Ukraine, China, and the UAE in the near future. "I believe that these are the main markets for us at the current stage. At the same time, we must also have an access to the EU markets, as we must expand. In fact, we are exporting products but I think we do this not at the proper level. We are working in this direction," said President Aliyev.

Azerbaijani businesses should actively use the opportunities of the World Wide Web. Thus, a web portal azexport.az has been launched by the Centre for Analysis of Economic Reforms and Communications. This trading platform is integrated with databases of major electronic trading platforms such as eBay, Alibaba, and AllBiz. Most importantly, it works. The geography of applications designed for the sales of Azerbaijani goods is very diverse covering Russia, Turkey, Iraq, Bulgaria, Libya, Moldova, Bulgaria, Libya, Ghana, and Nigeria.

The active intervention of the state in the national economy is already yielding results, and the new model begins to bear the first fruits such as creating new jobs and increasing export potential in the non-oil sector of Azerbaijan.