The Consequences of IMF's Policies in the Globalization Process: The Case of Azerbaijan

Abstract

IMF’s policies through to the World Economy have been changed in the globalization processes. Those policies have been applied in transition economies such as Russia, Bulgaria, Romania, Azerbaijan since the begining of 1990's. Particularly Azerbaijan, an attraction center for the foreign capitals because of its rich oil rezerves, is the interesting case for examining the applications and the implications of IMF’s policies. The aim of this study is to analyse some consequences of IMF’s reform policies in azerbaijan economy. Although IMFstyle stabilization policies have been applied successfuly, there have been occured an unbalanced growth between the oil sector and the other sectors in the transition period. In Azerbaijan, the share of the oil sector in the production of GDP is increased from 16% to 37% between 1995 and 2001. This increase might be considered as favourable, but on the other hand, the drop of non-oil sector’s share from 13% to 6% must be considered a serious problem for Azerbaijan economy. Additionally wealth gained by oil production has been spent on nontradable goods in Azerbaijan, their prices relative to those of tradable goods prices have rised. Since the real exchange rate would appreciate, international competitiveness of tradable good sectors seems to be decreasing. In the literature, this phenomenon is called 'Dutch Disease' which will drive to Azerbaijan economy more, to be depended on IMF’s policies and foreign debt in the future.Globalization; IMF's Policies; Azerbaijan Economy; Dutch Disease