The importance of energy resources for Azerbaijan’s international competitiveness

Abstract

The aim of this paper is to present a detailed analysis of the international competitiveness of Azerbaijani economy and, based on it, to determine the importance of energy resources and their derivatives in shaping the competitive profile of its economy in international trade during 2000-2015. In order to assess the country’s international trade competitiveness, two indicators have been applied, i.e., Balassa’s Revealed Comparative Advantages (RCA) index and the Lafay Index (LFI) of international trade specialization. The analysis conducted clearly shows that Azerbaijan’s overall international trade competitiveness is low, especially with respect to high and medium-high technology goods, while the only comparative advantages of its economy include exports of goods from the medium-low technology category, in which energy resources and their derivatives are classified. This proves the absolute key importance of these resources in the competitive profile of Azerbaijani economy, and to a large extent determines its resources-based character. This makes its further development strongly dependent on international markets for energy resources, thus increasing its susceptibility to external shocks.