Though it is a higher middle-income country with a booming oil industry, Azerbaijan is overcome by poverty and corruption. Its emerging energy sector could change the economic landscape by answering the question: why is Azerbaijan poor?

Despite economic growth in recent years, 80 to 85 percent of Azerbaijan’s population makes low wages and lives in poor conditions. However, the upper class makes up only two to four percent of its population.

Agriculture is a major source of employment, as 48 percent of the population lives in rural areas. Unfortunately, agriculture only makes up 6.7 percent of the GDP. In Azerbaijan’s rural areas, people suffer from poor infrastructure and limited agricultural production. This is due to inadequate access to services and equipment and rising food prices. Farmers struggle to compete in domestic markets and develop beyond subsistence levels of production. The rising competition in products from increased foreign exchange in oil revenue and liberalization policies also limit agricultural output.

Azerbaijan hopes to promote social equity by creating a sustainable and thriving economy. According to a report submitted by Azerbaijan’s National Coordination Council for Sustainable Development July 3, poverty has already decreased from 49 percent in 2001 to 4.9 percent in 2015.

The International Institute for Sustainable Development and the United Nations Environment Program are discerning why is Azerbaijan poor by studying Azerbaijan’s challenges. The organizations conclude that for Azerbaijan to sustain a thriving economy, it should shift to a green economy. This will improve human wellbeing and reduce environmental risks and ecological scarcities.

Azerbaijan foresees introducing green economic strategies in agriculture in 2018 to continue economic development and reduce poverty. To grow its agricultural production, Azerbaijan must promote stronger supply chains; enhance public-private partnerships with agri-business; promote education and capacity building and enforce stronger regulation on agricultural inputs and outputs. Prioritizing the energy sector to protect soil and water quality is also crucial. Finally, increasing microfinance to benefit the poor in terms of jobs and livelihoods will help grow the economy.

Since agriculture is the main source of employment in Azerbaijan, developing the agriculture sector alongside the energy sector will help alleviate the country’s poverty. Creating progress in the most unfortunate areas improves not only the country’s economy but the individual lives within it.

– Sarah Dunlap

Photo: Flickr