What is the economic system of Azerbaijan? The economy of Azerbaijan is based on a mixed economy. The country’s economic system combines elements of a market economy and a planned economy.
In Azerbaijan, the economy is composed of a private sector, consisting of individuals and businesses that make autonomous decisions based on self-interest, and a public sector, where the state determines the production and distribution of certain goods and services. No country is purely capitalist or purely communist.
What do the freedom indexes tell about the economic system of Azerbaijan?
Now, to determine if a country is mostly a market economy or a planned economy, it is useful to examine some economic indexes. For instance, according to the 2022 Index of Economic Freedom, which measures the ability of every human to control his own labor and property, Azerbaijan is ranked 75th globally and 37th in Europe indicating that the country has a moderately free economy.
In a similar way, the 2022 Freedom House index evaluates the state of political rights and civil liberties globally. Generally, market economies tend to align more with democracy and freedom, while command economies tend to be characterized by greater state control and fewer democratic and civil liberty protections. Azerbaijan gets a score of 9/100, which qualifies it as Not Free. Azerbaijan is a country where the government controls what people do for political reasons, and people have limited freedom to choose (what, how much, and how to produce, whether to buy or not, selling price, etc.)
The Link Between Public Sector Employment and the Economic System of Azerbaijan
An indicator of the extent to which the State is involved in the economy is the number of public sector employees. In Azerbaijan, according to ILOSTAT, the number of public sector employees as a percentage of the total workforce is 22.4% (2021). In the country’s mixed economy, the number of public sector employees as a percentage of the total workforce varies based on the specific policies and practices adopted by the State. Some economic activities are left to the private sector while others are under government control. The bigger the public sector the closer is the economy to being a command economy.
What does the biggest company in Azerbaijan say about the country’s economic system
The biggest company in Azerbaijan should also be looked at, as well as whether it is a state-owned or private company. In this case, SOCAR from Azerbaijan is a mixed private-public company. It is owned by both the Azerbaijani government and private shareholders. SOCAR is involved in the exploration, production, transportation, and sale of oil and gas.
The historical factors that have influenced the economic system of Azerbaijan
The current mixed economy system of Azerbaijan in the last century is largely due to the collapse of the Soviet Union and the transition to a more open market economy. This transition has resulted in increased foreign investment, the privatization of state-owned enterprises, and the emergence of a banking sector. These changes helped to create a more diverse economic system with both public and private sector involvement.