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21ECONOMIC SCIENCES
COMPETITIVE DEVELOPMENT POTENTIAL OF WEAVING PRODUCTS PRODUCTION IN THE REPUBLIC OF AZERBAIJAN AND WAYS TO USE IT EFFECTIVELY
Sadiqov Sh.
Phd
Ministry of Science and Education of the Republic of Azerbaijan
Institute of Economics DOI: 10.5281/zenodo.7275888
Abstract
The development potential of the weaving products production in the Republic of Azerbaijan and the issues of its effective use were studied in the article. In the article, the base of raw materials of weaving industry was examined, the current production situation was introduced, the structure and volume of supply and demand for weaving products was evaluated, imported products and their replacement possibilities were reviewed.
As a result of research, proposals were made in the direction of increasing the efficiency of using the development potential of weaving industry in the Republic of Azerbaijan
Keywords: competitiveness, competitive development potential, demand's structure, export opportunities, demand and supply segmentation.
Introduction
The organization of competitive production and the effective use of its potential are issues that always in the center of attention and given special importance. One of the main tasks of government is to provide the competitiveness of the economy, including the manufacture industry and effectively use from its development potential. Weaving industry sector is important among manufacture industry. Ensuring the competitive development of the weaving production sector plays an important role in the development of the regions of our republic, in providing the domestic demand for weaving products and employment, in eliminating dependence on imports, in increasing exports, in preventing foreign currency flows and in the formation of budget revenues. Ensuring the development of weaving industry areas also means the development of related agricultural areas. Thus, cotton, wool and cocoons are raw materials to produce weaving products, which are produced in the rural agricultural area. Existence of cheap and quality raw material is one the factors determining competitive development potential. Production of quality goods from raw material is impossible without enterprises with modern equipment and technology. Existence of enterprises with modern equipment and technology is other factor of competitive development potential. Experienced personnel are also one of factors competitive development potential. Therefore, competitive development potential means quality raw materials, professional personnel, enterprises with modern equipment and technology, favorable business environment. Demand and supply also influence to competitive development potential. Quality raw materials, professional personnel, demand, enterprises are the components that form competitive development potential, and favorable business environment means opportunities for realization of development potential.
Our republic is trying to form industrial enterprises that produce competitive products. 86-90% of our republic's import consist of oil and oil products. One of the main tasks of our republic is to eliminate
dependence on oil revenues, to replace imports and organize exports effectively. It is impossible to solve the mentioned problems without the development of manufacture industries. In this regard, our government pays special attention to the development of the manufacture industry. I would like to inform you that in 2017, the share of the mining industry in the value of the industrial product at actual prices was 70.3%, and the share of the manufacture industry was 24.4%. In 2021, the share of the mining industry in the value of the industrial product was 65.6%, and the share of the manufacture industry was 28.8% (1). The figures show that the share of the mining industry in 2021 has decreased by 4.7% in comparison with 2017, while the share of the manufacturing industry has increased by 4.4%. This statistic shows that the manfacture industry is developing in our republic.
I note that the share of the weaving industry in the total industry was 0.5% in 2017 and 0.7% in 2021. So, in comparison with 2017, the share of the weaving industry in the total industry in 2021 has increased a little.
The purpose of the article is to completly study the factors that determine the competitive development potential of weaving industry, that is, to evaluate of the raw material base of weaving production enterprises and the current state of production, to analyze the structure of supply and demand for weaving products, to investigate the possibilities of replacement of imported products, and to make proposals for the efficient use of production potential.
In accordance with the main goal, the raw material base of weaving enterprises and the current state of production were evaluated, the structure of supply and demand for weaving products was analyzed, imported products and their replacement possibilities were investigated, and proposals were made according to the obtained results.
Methods. Comparative analysis, logical conclusion and balance methods were used in the article.
The raw material base of weaving enterprises and the current state of production. The competitiveness of the company mainly depends on its domestic competitive opportunities, business conditions, degree of protection of domestic market, demand, supply and external environment. Internal competitiveness is determined by the level of provision of material and nonmaterial resources of the enterprise. Material resources of the enterprise mean raw materials, labor resources, fixed assets, financial resources. Intangible resources of the enterprise mean intangible assets, organizational resources, knowledge, experience, creative possibilities, information resources. In the current conditions, the degree of using of internal capabilities of the enterprise forms the appropriate level of competitive development. The potential capabilities and production potential of the enterprise are realized if business conditions arise. If the potential production capability is a matter within the competence of the enterprise, the business conditions are shaped by the government. Potential opportunities cannot be used if conditions are not favorable. Favorable business conditions affect realization and increase of potential. Unfortunately, the development potential of the weaving industry is not fully and effectively used in our republic.
Table 1
Production of cotton, wool and cocoons in the Republic of Azerbaijan, tons
n Indicators 2017 2018 2019 2020 2021
1 Cotton 207525 233592 295279 336792 287 041
2 Wool 16040 15849 16095 16128 16 138
3 Cocoons 245,2 513,9 643,7 446,6 497,4
Source 1. Prepared by the author based on data SSCA
Based on the data of the table 1, when we compare the cotton production for the years 2017-2021, we can see that the volume has been increasing from year to year, but comparing with 2020, it has decreased by 49751 tons in 2021 or 14.78%. This reduction is due to the spread of the Covid-19 disease. I would like to inform you that the main reason for the increase in cotton production is the increase of its export. Thus, the ever-growing export market is the driving force of production growth.
Wool production increased by 98 tons in 2021 compared with 2017. This cannot be considered a serious increase. The stability of wool production is mainly due to the absence of wool collection centers in the regions and the using of wool raw materials remaining at the same level in 2020 compared to 2017. One of the main reasons for stability in the field of wool production is the lack of management and systematic approach in the field of production-supply-processing. I would like to mention that due to the lack of wool collection points, wool is thrown into landfills in its original form. Unfortunately, at present, wool is used to a very low level in the local weaving industry as a raw material.
One of raw material of weaving industry enterprises is cocoon. Within the framework of the measures taken to develop the non-oil sector, restoration of cocooning and sericulture has been identified as one of the priority areas of agriculture. The "State Program for the development of cocooning and sericulture in the Republic of Azerbaijan for the years 2018-2025" prepared for the purpose of implementing the planned works on the development of cocooning and sericulture on the basis of a single program. The purpose of adopting this program is to strengthen government support to the sector, increase export potential and ensure employment in rural areas. To know the current situation in the field of cocoon production, let's refer to the information of table 1. It can be seen from the table that the cocoon production increased by 252.2 ton or 2.03 times in 2021 compared to 2017. The highest increase in cocoon production was observed in 2019, which was 2.63 times more than in 2017. I should mention that the cocoon is a raw material in the production of silk products.
I would like to note that as a result of the increase in the demand for silk products in the world market, there is a tendency to increase in its price. Currently, the price of 1 ton of raw silk in the world market is equal to the price of 20 tons of cotton raw. In last years, there has been a continuous increase in the production of cocoon in the world market. Silk contains approximately 0.2% of world weaving industry products. Support for cocoon
As mentioned above, the company's ability to compete is directly depend on presence of a cheap and high-quality raw material base. The primary raw materials of weaving enterprises are wool, cotton, silk, synthetic fibers. Since cotton raw material is important for the development of the weaving industry and an export product, the government pays special attention to the development of c cotton-growing. So, in order to ensure the development of cotton growing, special law was adopted. The purpose of adopting this law is to create a legal and economic basis for the development of cotton cultivation in the country, the regulation of relations between cotton production and processing in accordance with the market economy, the increase of the competitiveness of cotton and cotton products, and the integration of cotton cultivation into the light and food industry.
According to the logical sequence, let's get acquainted with the current situation in the field of cotton production as the raw material base of weaving enterprises. For this purpose, let's refer to the information of the State Statistics Committee of Azerbaijan (SSCA).
production is defined as one of the main priorities of the government's economic policy in countries that want to develop sericulture.
From the data of table 1 can be seen that there are raw materials for the development of the weaving industry in our republic. This is one of the main factors determining the development potential in the relevant field. Another important factor is the existence of enterprises in this field. In this regard, let's see of weaving industry enterprises' main indicators.
Table 2
Key performance indicators of weaving industry enterprises
Name of indicators 2017 2018 2019 2020 2021
Total number of operating enterprises 67 74 80 89 93
state 12 13 14 13 13
non-state 55 61 66 76 80
Number of individual entrepreneurs registered to engage in industrial activity, person 157 168 182 215 247
The value of the industrial product (works, services) at the current prices of the respective years, in millions dollars 107.24 146.06 179.0 141.71 217.35
Industrial production index, compared to the previous year, in percent 144,7 142,4 133,2 84,2 127.2
The share of the area in the total value of the industrial product pro- 0,4 0,5 0,6 0,7 0.7
duced in the country, in percentage
The share of the non-state sector of the field in the non-state sector of 0,5 0,6 0,8 0,8 0.8
the country's industry, in percent
Investments to fixed assets, in million dollars 3.47 25.24 51.94 9.06
The share of investments of the field in the total value of investments 0,1 0,5 0,9 0,2
directed to the industrial sector, in percentage
Production of the main types of products in kind
Cotton fiber (carded and combed), thousand tons 37,9 61,0 85,0 71,6 92.5
Cotton fabrics, thousand sq. m 16830,2 19314,4 21098,0 29965,5 33918,9
including commodity 16629,6 19314,4 21098,0 29965,5
Silk fabrics, thousand sq. m 274,5 40,7 103,2 - 69,8
including commodity 92,3 13,7 - -
Cotton bed sheets, thousand pieces 371,6 580,7 610,5 268,1 350,9
Cotton yarn, thousand tons 24,7 34,8 11,7 22,5
Carpets and carpet products, thousand sq. m 0,4 2,4 3,0 1,3 13.0
Socks, thousand pairs 2367,8 3248,9 2993,0 3078,7
Source 1. Prepared by the author based on his data SSCA
It can be seen from the data of the table 2 that the number of weaving industry enterprises increased in 2017-2021. The increase in the number of weaving industry enterprises indicates the presence of business interests in this area. I would like to add that the increase in the number of enterprises was not due to state enterprises in this field, but to private enterprises. Number of individual entrepreneurs registered to engage in industrial activity were increase too during the period 2017-2021. Value of industry product in current price was increase by 2.03 times during the period 20172021. An increase by 0.3% was observed in the share of the field in the total value of industrial products produced in the country. Production of cotton fiber, cotton fabrics, carpets and carpet products, socks were increase, but cotton bed sheet and silk fabrics has decreased in kind during the period.
If we see at the production data of the most important types of weaving industry products in terms of economic efficiency, in that case more importance was given to the production of cotton fabrics than the production of cotton yarn and cotton. This result can be connected to the fact that the profit obtained from the production of cotton fabric is greater than the profit obtained from the export of cotton yarn. This result also
connected with creation of domestic demand for fabric products. So that, compared to 2017, the production of cotton fabrics in 2021 increased to 17088.7 thousand square meters or 2.02 times. Cotton bed sheets production decreased in 2021 compared to 2017, while carpets and carpet products production increased. This is due to the fact that the special attention paid to the development of carpet production by the government has shown its positive results. The production of knitted socks increased by 710.9 thousand pairs in 2021 compared to 2018 (table 2). This is an indicator of revival in the production of socks. Despite the special care and support given by government to the development of the weaving industry, the development is not at the expected level. In the current situation, there is a great need for the expansion and concretization of the government and private business cooperation framework in the field of weaving industry.
It was mentioned above that there is an increase in the number of weaving enterprises. Such a question arises; on size in which group of weaving enterprises this increase was observed? For this purpose, let's see at the data of table 3.
Table 3
Grou
ring of operating enterprises by size, unit
2019 2020 2021
Si aj M aj M
sS CS CS
N Indicators Micro Small ■a s S ui ■S 0J £ Micro Small ■a s S ui ■S 0J s Micro Small ■a s s S ui ■S 0J s
1 Manufacturing industry 1328 564 438 1515 557 443 1693 600 484
2 Weaving Industry 37 16 27 47 15 27 51 12 30
3 Clothes manufacturing 70 20 9 80 23 9 88 22 10
Source 1. Prepared by the author based on the information of the SSCA
It can be seen from the data of table 3, that the increase in the number of weaving enterprises was observed in micro and medium-sized enterprises, and even the number of small enterprises decreased by 4 units in 2021 compared to 2019. Decrease in the number of small enterprises 2019-2021 period relates to the growth of those enterprises and their inclusion in the group of medium and large-sized enterprises. The increase in the number of clothing manufacturing enterprises in 2019-2021 period was mainly observed in the number of small enterprises. These data show a slight rise in the number of weaving and clothing manufacturing enterprises. Let me add that the increase in the number of enterprises does not indicate that all of them were operated in that period. Though new enterprises were opened and new private business subjects were registered, only a part of them operated.
It can be seen from the data of table 4 that compared with 2017 in 2020 in terms of value added indicator, the share of the mining industry in the total industry is decreased 2781.82 million dollar or 6.1%, increase of shares of manufacturing industry 513.06 million dollars or 5.4%, the weaving industry 26.59 million dollars or 0.2%, clothing production 0.77 million dollars or 0%. This increase can be attributed to the reforms carried out by the government in this area, and the increasing role of the manufacturing industry. But
I would like to inform that according to the existing legislation in our republic, micro-entrepreneurial enterprises are those with an average number of employees of 1-10, and an annual income in the interval of 0-117.65 thousand dollars, and small enterprises are those with an average number of employees of 11-50, and an annual income interval of 117.65 - 1764.71 thousand dollars, medium and large enterprises mean companies with an average number of employees of 51250 and an annual income interval of 1764.7117647.06 thousand dollars, while large enterprises mean companies with an average number of employees more than 250 and an annual income more than 17647.06 million dollars.
Let's see at the position of the weaving industry in terms of creating value added in the industry. For this purpose, let's refer to the data of table 4.
the government's expectations from the development of the manufacturing industry, including the weaving industry are greater. I hope that these expectations will become reality in the near future.
Assessment of supply and demand for weaving industry products: As we know, domestic demand for weaving industry products is great. Domestic demand is mainly covered by imports. I would like to clarify that most of the imported goods are low in price but not high in quality. Produced cotton and similar products
Table 4
Creation of value added by industry sectors, at current prices, in million dollars
2017 2018 2019 2020
N Name of industry branch %-with %-with
B Mining industry 14140.82 85.2 18259.64 16968.71 11359.0 79.1
from it, crude oil and natural gas production 13338.29 80.4 17479.18 16180.71 10605.41 73.9
C Manufacturing industry 1944.41 11.7 2176.53 2410.47 2457.47 17.1
Weaving industry 48.65 0.3 67.06 81.47 75.24 0.5
clothing manufacturing 11.35 0.1 11.41 12.35 12.12 0.1
D Electricity, gas and steam generation, distribution and supply 429.06 2.6 457.59 465.71 453.35 3.2
E Water supply, waste treatment and processing 78.94 0.5 85.71 88.0 83.41 0.6
Total 16593.23 100,00 20979.47 19932.88 14353.23 100,00
Source 1. Prepared by the author based on the information of the SSCA
are exported in raw form after primary processing. Exported raw materials are converted into products in foreign countries, some of them are imported to our republic. Most of the part value added associated with the creation of the product is created in foreign countries and part of the employment is provided in foreign countries too. Revival of the production of weaving products will increase the production of raw materials and stimulate the development of regions. I should note that the annual domestic demand for weaving products was 363.7 million dollars in 2020. Thus, the stock of weaving materials and products amounted to 29.2 million dollars at the beginning of 2020 (+), 401.8 million dollars were imported during 2020 (+), 141.7 million dollars were produced in the corresponding period (+), and
the volume of exports was 182.1 million dollars (-), and by the end of 2020 the stock was 26.9 million dollars (-). If we approach the mentioned data with the balance method, in that case determine the domestic demand for weaving products in 2020 was 363.7 million dollars. If I apply this approach to the figures of 2021, in that case domestic demand was 422.15 million dollars in 2021. Therefore, the domestic demand for weaving products increased by 58.45 million dollars or 16% in 2021 compared with 2020. The domestic demand for cotton was approximately 365.6 million dollars in 2020. This means 236.42 million tons of cotton in kind term.
Let's have a see at the data of import and export to get a more detailed assessment of supply and demand for weaving products.
Table 5
Exports of weaving products, thousand US dollars
n Product group 2018 2019 2020 2021
1 Silk 292.17 959.72 1 100.38 4213.07
2 Wool, fine or coarse animal hair; horsehair yarn and fabric 85.55 5.59
3 Cotton 108346.08 158468.81 156842.46 273002.79
4 Other weaving fibers of vegetable origin; paper yarn and paper yarn fabrics 92.50 50.40
5 Chemical yarns, flat and similar yarns of chemical weaving materials 1480.47 1253.79 836.37 1353.35
6 Chemical fibers 354.16 304.96 682.33 125.06
7 Cotton, felt and non-woven materials; special thread; ropes, ropes and cables and products from them 38.84 31.21 65.39 416.56
8 Carpets and other weaving floor coverings 324.02 471.96 379.64 390.33
9 Special fabrics; tufted weaving materials; laces; decorative materials; embroideries 788.44 685.85 422.14 97.31
10 Impregnated, coated, recycled weaving materials; technical weaving materials 46.18 6.76 91.62 31.83
11 Machine and hand knitted fabrics 36.72 30.62 16.48 0.01
12 Machine or hand knitted clothing items and clothing accessories 358.12 504.66 544.46 452.18
13 Clothing and clothing accessories, other than knitted or crocheted by machine or by hand 985.16 626.46 876.26 968.75
14 Other finished weaving products; sets; used clothes and weaving items 21981.12 22090.26 20260.49 21913.70
15 Headwear 8.80 25.06 12.36 9.99
Source 3: Prepared by author based on the materials of the State Customs Committee of Azerbaijan
It can be seen from the data of table 5 that, silk and cotton exports increased in 2021 compared to 2018. In the corresponding period, there were slight changes in the structure of exports for other products. The presence of a stable picture on other product's groups figures indicates the slow implementation of structural reforms and improvements in the relevant industry. If export indicates the presence of demand for the domestic product in foreign countries, import indicates the demand in the domestic market. If the foreign demand for products is constantly increasing, it indicates that this field is constantly improving and the quality of the work of managers, the proper organization of marketing work, and the state's reforms are being carried out in the right direction. I would like to mention that producing high-quality and low-cost products that meet advanced
standards is the first aspect of effective activity. The second aspect of effective activity is realization of products at a favorable price. Both aspects of effective operation depend on the knowledge, skills and experience of managers in this field. In addition to these, the state's support to the field, the speed of reforms, and a favorable business environment directly affect the efficient operation of enterprises. Let's have a look at the structure of weaving products' imports from the point of view of the domestic demand's structure research. Investigation the structure of imports is important for the purposes of organizing domestic production. If the volume of imports increases from year to year, this indicates the decrease of local production in the relevant field from year to year, as well as the lack of protection of the domestic market
Table 6
Imports of weaving products, thousand US dollars
n Product group 2018 2019 2020 2021
1 Silk 345.70 95.76 42.94 34.78
2 Wool, fine or coarse animal hair; horsehair yarn and fabric 1055.68 1228.16 888.46 698.68
3 Cotton 5528.81 6163.15 6288.85 5561.82
4 Other weaving fibers of vegetable origin; paper yarn and paper yarn fabrics 3077.30 3985.92 3592.34 3529.25
5 Chemical yarns, flat and similar yarns of chemical weaving materials 45133.02 45560.60 33277.77 42982.44
6 Chemical fibers 7119.42 13410.15 12355.06 14481.73
7 Cotton, felt and non-woven materials; special thread; ropes, ropes and cables and products from them 13717.76 23118.67 29428.30 47858.54
8 Carpets and other weaving floor coverings 18141.40 18852.52 15268.73 21282.41
9 Special fabrics; tufted weaving materials; laces; decorative materials; embroideries 6909.92 9435.64 7494.70 8193.38
10 Impregnated, coated, recycled weaving materials; technical weaving materials 7936.99 8499.65 8765.72 8409.22
11 Machine and hand knitted fabrics 13822.30 20548.93 20741.06 32610.19
12 Machine or hand knitted clothing items and clothing accessories 153584.76 153338.18 114504.64 164459.50
13 Clothing and clothing accessories, other than knitted or crocheted by machine or by hand 118535.25 123360.24 91815.59 97439.84
14 Other finished weaving products; sets; used clothes and weaving items 36049.44 33856.41 57357.41 49062.25
15 Headwear 3831.22 4214.63 3641.23 4607.54
Source 3: Prepared by author on the material of State Customs Committee of Azerbaijan
It can be seen from the data of table 6, that compared with 2018 in 2021 export by "other weaving fibers of vegetable origin; paper yarn and paper yarn fabrics", "chemical fibers", "cotton, felt and non-woven materials; special thread; ropes and cables and products from them", "carpets and other weaving floor coverings", "special fabrics; tufted weaving materials; laces; decorative materials; embroideries", "impregnated, coated, recycled weaving materials; technical weaving materials", "machine and hand knitted fabrics", "machine or hand knitted clothing items and clothing accessories" are increased.
It can be seen from the data of the tables 5 and 6 that weaving industry products are exported from our republic in the form of raw materials, and imported into our republic in the form of products.
This indicates that the most of the added value on product production is created in foreign countries and certain part of employment is provided in foreign countries too. Although giving the structure of import and export in terms of value gives full information about the state of this field, in my opinion, it is necessary to pay attention to some natural indicators of export.
Table 7
Some weaving products export in kind
n Product group 2018 2019 2020 2021
1 Cotton fiber, ton 54314.15 89720.21 100466.82 126997.96
2 Cotton yarn, tons 9488.50 12803.35 9 040.91 18 429.01
Source 3: Prepared by author on the material of State Customs Committee of Azerbaijan
It can be seen from the data of table 7 that cotton is partially processed and exported in the form of cotton fiber and cotton yarn. The export volume increased in forms of cotton fiber 2.34 times and cotton yarn 1.94 times compared 2018 in 2021. In the considered period, the price of one ton of exported cotton fiber varied between 1481-1660.80 dollars, and the price of one ton of cotton yarn varied between 2494-3153.46 dollars. Therefore, most of cotton is exported in the form of fiber, which is more cheaper. This indicates that the export is organized in a more ineffective form.
The above-mentioned data of import and export indicate of general demand in the domestic and foreign
markets. But these data do not allow us to make an opinion about the demand segments in the market in terms of prices of goods. it's important for goods production to have information about their sales markets, structure and volume of demand, the incomes of the population, the price of products available in the concrete market, and information on competitors in concrete market. It should be taken into account of income to be obtained from the activity in the market. For this purpose, there is a great need for segmentation of supply and demand in both domestic and foreign markets. Segmentation of demand and supply in the
market of weaving products will allow local production to be organized accordingly.
Imported products and their replacement possibilities: Formation and development of import-replacement production is considered one of the main priorities of the economy of our republic.
That is why important to examine of import replacement possibilities of some weaving products. As mentioned above, there is a domestic demand in the field of weaving industry products. This market is estimated at approximately 422.0 million dollars for year. But several local weaving products are not at the level of competition in the domestic market with foreign goods. Due to the domestic market being filled with imported products, problems have arisen for local production. Even for some local weaving products do not have a place in the market at all. On some products group import exceeds export by 2.21 times. It is accepted that the products of weaving enterprises cannot compete with the corresponding products imported in the domestic market. Because Azerbaijan weaving enterprises is in the reformation stage. Local weaving products are superior to foreign products in terms of health and hygiene. It is true that locally produced products are lagging behind foreign products in terms of design and technological processing, but this problem can be solved step by step by creating favorable conditions for local production. In order to develop this area, the goal based on the possible opportunities, and then the tasks according to the goal should be defined. During the reformation of the production of weaving products, the segments of the domestic market and then the foreign market should be taken into account, the target audience of the produced product should be determined and a favorable business environment for the development of enterprises should be formed. Import replacement cannot happen without domestic production. Production cannot develop without the interest of micro-businesses in this area and a favorable environment. It is not profitable to organize the production of all weaving industry products in our republic. Import replacement should be carried out for specific weaving products. Even a part of the weaving products of our enterprises has export potential. Let's take a closer look at the possibilities of import substitution separately for weaving products.
The main weaving products imported to our republic are silk, wool, fine or coarse animal hair, yarn and fabric from horse hair, cotton and other vegetable weaving fibers, paper yarn and fabrics from paper yarn, chemical yarns, felt and non-woven materials, special yarn, ropes and cables, carpets and floor coverings, technical weaving products. It can be seen from the list of imported weaving products that it is not possible and efficient to replace all products in the near future. The reason for this is that many of the products contain chemicals and their prices are quite cheap. These cheap products are mainly imported to meet the needs of the low-income population and production. Despite this, medium and high-priced products are imported to meet the needs of the middle and high-income population. Replacement of some imported products is unfavorable due to low prices. The application of high customs
duties and taxes on imported products for the purpose of protecting the domestic market deprives the low-income population of purchasing relevant goods. Then a question arises, should high customs duties and taxes be applied to some imported weaving products in order to support of local production, or should the existing customs duties and taxes be kept in force, taking into account the situation of the low-income population? In my opinion, the production of weaving products should be organized in accordance with the needs of specific buyer groups identified as the target audience in local and foreign markets. In this direction should be created favorable business environment and provided government support, advertising work should be carried out in this direction too. The use of economic stimulation in order develop local production, protect the domestic market and access to foreign markets should be implemented systematically depending on the type and volume of the produced goods.
In my opinion, our republic has the possiblility to replace imports of silk, wool and yarn and fabric made from them, cotton, machine and hand knitted fabrics, machine and hand knitted clothing items and clothing accessories, headwear. This is also confirmed by import and export data. For example, compared to 2018, in 2021 the volume of export of silk products increased in 14.42 times, and imports decreased in 9.94 times. The volume of imports of wool and yarn and fabric made from it decreased in 2021 compared with 2018, and the reason is that the corresponding product is replaced by another product. Compared with 2018, in 2021 cotton export increased in 2.52 times, while its import remained almost at the same level at that period. Compared with 2018, in 2021 the export of cotton fiber in kind term increased up to 2.34 times and cotton yarn more than in 1.94 times. I would like to mention that there was no import of cotton fiber and cotton yarn during the considered period. From the figures of the tables 5 and 6 are seen that more of growing domestic demand is covered by imports. Clothing production has been changing in the interval of 60.94-76.47 million dollars annually in the period of 2018-2021 (2). In general, the import of clothing products exceeded the domestic production of clothing up to 5.35 times in 2018, and more than 4.55 times in 2021. if domestic demand for clothing products are approxmately $350.0 million in 2018 and $405.0 million in 2021, in that case I can say that its parts of 93% in 2018 and 87% in 2021 were provided by import. Currently, our republic has opportunities to partially replace imports of machine and hand-woven knitted fabrics and machine or hand-woven knitted clothing items and clothing accessories. In order to replace imports for the mentioned products, the domestic market should be protected, a favorable business environment should be created for production, government support should be provided in personnel training, foreign companies should be invited to the republic, legal support should be provided to them, or joint ventures should be established with them.
Conclusion
In my opinion, it is appropriate to implement the following proposals for effective use of the competitive
development potential of the production of weaving products.
1. In order to effectively use the competitive development potential of the production of weaving products should be researched of the structure and volume of supply and demand and the efficiency of the good's types production considering the price parameters in the local and foreign weaving products markets.
2. Based on the results of the research, the domestic market should be protected for the types of products whose production is considered efficient, and economic mechanisms should be used for the purpose of developing the relevant areas.
3. Government support should be provided to weaving enterprises in the implementation of advertising and marketing research, more precisely, 30-50% of such costs incurred by enterprises should be covered by the government within a certain period (no more 10 years).
4. Enterprises of the relevant field should be exempted from taxes of profit, property and land for at least 10 years.
5. Raw materials and production equipment imported by enterprises of the relevant field should be fully exempted from customs duty and taxes.
6. By using the opportunities and means in the hands of the government, work should be carried out in the direction of giving priority to the purchase of local products among citizens, the psychology of supporting local production should be formed in the population, mass advertising means should be used in this direction.
7. Taking into account operations of financial and economic are carried out in electronic form and the operations are controlled by government authorities should be completely abolished external interference to business.
8. The development of carpet weaving should be directed to specific customers and markets based on the production of original products.
9. Government support should be provided to local companies in the field of personnel training and participation in exhibitions held abroad. The government should always be with businessmen and help them
solve their problems. The attitude of the government towards business should be established on a solid basis and should not consider business as a source of ensuring budget revenues.
10. Work towards the creation of innovation products should be done and financed by the government. Innovative product and technology should be delivered to enterprises by the government.
11. The cluster organization method should be applied to the production of weaving products.
12. As a buyer, the government should take advantage of the products of local manufacturers, that is, the preferential opportunities given to local weaving products during government procurement should be further increased.
13. The system of measures of complex support and concession should be prepared by the government, and these measures should be implemented in a complete and systematic way in order to realize the competitive development potential of the production of weaving products.
14. The government should form a competitive advantage on one or more components of this potential in order to increase the competitive development potential of the sector.
15. Regular sales fairs of weaving products should be organized within the republic at the expense of the government, export promotion means should be expanded, and the government should support local enterprises in foreign markets.
16. The possibilities of electronic sales and electronic advertising tools should be used more widely to increase sale.
References
1. The State Statistics Committee of Azerbaijan's website information, https ://www.stat. gov. az/source/agriculture/
2. State program for the development of cocooning and sericulture in the Republic of Azerbaijan for 2018-2025, November 27, 2017, https://e-qanun.az/
3. The State Customs Committee of Azerbaijan's website information, https://customs.gov.az/
