Научная статья на тему 'Influence of foreign trade relations on provision of Azerbaijan’s economic security'

Influence of foreign trade relations on provision of Azerbaijan’s economic security Текст научной статьи по специальности «Социальная и экономическая география»

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Ключевые слова
ECONOMIC SECURITY / FOREIGN TRADE / IMPORT / EXPORT / FOOD BALANCE / NON-TARIFF REGULATION / AGRICULTURAL PRODUCTS

Аннотация научной статьи по социальной и экономической географии, автор научной работы — Dadashova Jala Bayram Qizi

The dynamics of the socio-economic development of the country is a prerequisite for ensuring its economic security. The economic security of each country depends on the level of its economic development. In order to ensure sustainable economic development in the country, problems encountered in domestic and foreign trade should be solved in a timely manner. The article lists internal and external economic factors affecting Azerbaijan’s economic security. The parameters required for the economic security of the Azerbaijani state are indicated. Taking into account the participation of the Republic of Azerbaijan in international economic relations as one of the main economic risks, export balance is export oriented at the expense of raw materials, and food provision is provided by import

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Текст научной работы на тему «Influence of foreign trade relations on provision of Azerbaijan’s economic security»

Section 7. Economic security

Dadashova Jala Bayram Qizi, Doctorate at the Azerbaijan Cooperation University E-mail: haciyeva_gulnara@mail.ru

INFLUENCE OF FOREIGN TRADE RELATIONS ON PROVISION OF AZERBAIJAN'S ECONOMIC SECURITY

Abstract. The dynamics of the socio-economic development of the country is a prerequisite for ensuring its economic security. The economic security of each country depends on the level of its economic development. In order to ensure sustainable economic development in the country, problems encountered in domestic and foreign trade should be solved in a timely manner. The article lists internal and external economic factors affecting Azerbaijan's economic security. The parameters required for the economic security of the Azerbaijani state are indicated. Taking into account the participation of the Republic of Azerbaijan in international economic relations as one of the main economic risks, export balance is export oriented at the expense of raw materials, and food provision is provided by import.

Keywords: economic security, foreign trade, import, export, food balance, non-tariff regulation, agricultural products.

The dynamics ofthe socio-economic development of the country is a prerequisite for ensuring its economic security. The economic security of each country depends on the level of its economic development. In order to ensure sustainable economic development in the country, problems encountered in domestic and foreign trade should be solved in a timely manner. Otherwise, these problems can become a source of danger for the country's sustainable development. The experience of the world's developed countries makes it possible to conclude that the problem of economic security has now become an integral part of the foreign and domestic trade policies of the countries.

Ensuring economic security reflects a state of the economy that no threats are expected from the inside or outside of the country, preventing its sustainable development. In the event of an inadequate develop-

ment of internal and external processes, there are sufficient defensive resources in the country to protect national interests. While the problem of economic security and its solutions are typical for all countries, the parameters of its security are not the same for all states. This is due to the fact that external and internal factors that guarantee the country's economic security are not shared or distributed equally in all countries.

Internal and external economic factors affecting Azerbaijan's economic security can be grouped into two main groups:

1. Natural factors: the existence of the natural resources available to the country, its geographical position, the state of labor resources, etc.

2. Economic factors: the level of market economy and its infrastructure, the place of the country in the international division of labor and the integration

into world countries, the level of economic resources utilization, integrity of the territory, the completeness of the economic space and reprocessing process, the competitiveness in international markets.

The extent and structure of its natural resources is the main factor of the state's economic security. Countries with richer natural resources do not invest heavily in ensuring economic security. Azerbaijan is also a group of countries with rich natural resources. The first group factors are very characteristic of Azerbaijan's economy. Production of goods and services is carried out using the production factors formed with the help of natural resources, high skilled workforce, scientific and technological progress and human capital. It should be borne in mind that, in some scientific studies on national economic development and growth, the abundance of natural resources has a negative impact on economic development and progress.

From the experiences of countries around the world, certain processes occurring in the country can also pose a threat to such processes as:

1. Reducing the level of economic growth in the country and reducing domestic demand through more imports;

2. The decline in the living standards of the population, the increasingly unemployed army and the poor;

3. Violation of foreign trade balance and increase of import specific weight;

4. Irreversible character of corruption in the country, economic crime;

5. Investment policy does not meet the required requirements, limits of foreign investment in the economy of the country;

6. Improper monetary policy and increased inflation risks;

7. The decline in the production of foodstuffs, the need to meet the demand for imports;

8. State reserves are not adequate;

9. The State's non-expenditure of revenues from strategic economic sectors is less cost effective and appropriate;

10. Corrective of structural reforms, violation of balance between economic structures and its onesided development;

11. Decrease in investment and innovation activity and optimal use of scientific and technical potential;

12. Increase in foreign debt, foreign currency outflows, excessive economy, etc.

All of these can lead to a breakdown of economic stability in the country, a sharp decline in the living standards of the population, financial crises and other unpleasant consequences. Therefore, it is important that each of these factors be considered in the focus of the economic security strategy. [1, P. 28]

Based on world practice, economic security strategies of various countries, as well as software projects developed by Azerbaijani specialists, the parameters of the state's economic security can be coordinated with the following sequence:

Logical sequence of parameters required for the economic security of the Azerbaijani state.

Only economic security can be said about the existence of the parameters. Exactly ensuring that all these parameters are properly maintained can provide the economic security of the Azerbaijani state [2, p. 62-63]. Most of these are expressed in concrete numbers in each country: for example, inflation should be up to 3%, the budget deficit should not exceed 3% of GDP, 30% of domestic debt, the debt is 30% of GDP and 25% of fixed capital investments are considered acceptable.

In a globalized world in modern times, the economic security problems of each country are intensifying. So much depends on the productivity of production and consumption, such as the competitiveness of commodities and services, including the sharpening of specialization in the international division of labor, the lowering of costs and costs, and increasing the use of innovations. It is difficult to provide security because some countries have a non-competitive economy. The economy ofAzerbai-jan has been facing difficulties in implementing the transformation of the economy since 1992, taking

into account national and economic security issues. debt, the level of prices and the degree of tax burden.

Because it would not have been possible to prepare The level of budget deficit in each country should not

the economy directly for international relations, to exceed 20% in a year, and more than 10% for several

j oin the external relations, and to regulate the foreign consecutive years.

Figure 1.

Note: The image was compiled by the author on the basis of the existing economic conditions

It is necessary to increase the focus on the structure of the real sector in ensuring the economic security ofAzerbaijan. Here, they can achieve achievements in improving the country's economic security by improving the structure of production, preventing deformities, optimizing macroeconomic proportions. In Azerbaijan, it is not just a matter of improving the quality of production, but also reorienting it to the restructuring. That's why it is a strategic line for attracting foreign investments to the country because of lack of financial resources.

One of the problems that poses an economic threat to Azerbaijan is the weakness of scientific and technical potential. This is due to the downturn in investment and innovation. It is beyond the ability to solve this problem without investing heavily in strategic areas of the national economy. However, as we have noted, Azerbaijan's natural resources, which are not analogous to the world, can allow this. This, in particular, depends on the use of natural factors in the country. It should be borne in mind that natural resources are infinite, and it is inevitable that there

are negative aspects of trying to get out of it with intensive use. Therefore, control over the efficient use of natural resources is necessary and regulated.

Taking into account the participation of the Republic of Azerbaijan in international economic relations as one of the main economic risks, export balance is export oriented at the expense of raw materials, and food provision is provided by import. The formation and development of the national economy on a healthy basis, the formation of national ownership of the population is a factor which negatively affects the quality of life and slowing down the resolution of social problems. World practice shows that more than 20-25% of total consumption can be a threat to the country's independence if dependent on imports. This problem will also lead to the country's foreign exchange reserves. This is also a means of economic danger.

According to the State Customs Committee, exports of food products (including beverages and

Table 1.- Azerbaijan's major agriculture in 201

tobacco) will amount to $0.77 billion in 2015, $0.53 billion in 2016 $0.59 billion in 2017 If imports of foodstuffs were $1.3 billion in 2015, $1.34 billion in 2016 $1.57 billion in 2017. As it is seen from the statistical data, exports of food products increased by 20.8 percent in 2015-2017, while exports declined by 23.4 percent.

Over $84.6 million will be invested in Azerbaijan in 2017 hard wheat in the amount of121.0 mln. soft wheat and meslin in the amount of $21.6 million. USD corn was imported.

If we look at food balances in the country, it can be understood that in 2005, 1006,1 thousand tons of wheat total imports, while in 2016 this figure increased by 593.500 tons to 1599.600 tons. In 2017, it dropped to 1274.400 tonnes, or 2.6 percent of total imports.

Table 1 and Table 2 below provide information on the country's needs for some agricultural products and their dependence on imports.

0-2017 level of product supply (in percent)[3]

The name of the product 2010 2011 2012 2013 2014 2015 2016 2017

Grain Plants 56.5 64.8 64.3 63.9 60.6 64.5 63.8 66.3

Potato 100.5 101.6 98.2 97.6 89.7 89.1 85.5 89.2

All kinds of vegetables 97.6 95.7 98.9 102.3 103.4 103.4 105.4 115.2

Fruit and berry 107.8 116.8 125.7 121.8 120.1 113.7 116.4 122.4

Milk 70.4 70.9 72.5 76.0 76.3 84.3 87.7 86.1

Beef 95.5 88.0 92.6 86.3 87.7 91.8 93.5 86.3

Sheep meat 99.7 99.8 98.5 97.7 97.9 99.3 98.7 98.0

Bird meat 70.6 79.9 87.8 98.5 98.0 98.6 79.1 79.7

Eggs 97.8 77.4 96.2 100 99.7 99.7 98.8 100.5

As can be seen from the table, self-sufficiency with foodstuffs can not be considered as savvy. Thus, the level of self-sufficiency in potatoes in the republic, as well as the supply of livestock and poultry has been decreasing.

Analysis shows that potato imports have continued at an accelerated pace until 2016, an increase of more than fourfold in 2005 and totaling 191,200

tons in 2016. In 2017, slightly (by 11.7%) it was 168.8 thousand tons. Potato exports have also made significant progress in 2017. Thus, the export of potatoes in 2005 amounted to 39.1 thousand tons, in 2010 it increased by two times to 69.9 thousand tons, in 2015 and 2016 it decreased twice to 36.7 and 38 respectively, Despite its 3,000 tonnes, in 2017 it has risen significantly (more than 1.5 times) to 57,700 tons.

Import of all types of vegetable products in 2005 will be 24.300 tons, in 2010-84.900 tons, in 201542.0 thousand tons, in 2016-61.2 thousand tons, in 2017 and 45.9 thousand tons. There has been a decline in the dynamics ofimports ofvegetables over the past period. Import in 2017 was reduced to 40,000 tons in comparison with 2010. There is a significant increase in exports. Thus, export of all types of vegetables

Table 2 shows that the level of import dependence of cereals, potatoes and poultry is still high in 2010-2017.

The relative decline in imports of all types of flour in Azerbaijan was observed in this period, and thus the level of self-sufficiency was satisfactory (96 percent in 2017). The level of self-sufficiency in macaroni products decreased from 72.7 percent in 2010 to 48 percent in 2017. Significant progress has been achieved in the provision of cleaned rice and groats.

While sugar production in our country is high in sugar production, sugar production is not covered by local raw materials. This leads to a foreign exchange flow for imported raw materials. Looking at tea production, it can be seen that in the years 2010-2017, self-sufficiency of tea has dropped, as a result of which importivity has increased.

Proper customs policy pursued by the state primarily serves to ensure economic security of the country and protection of the domestic market. Cus-

in 2017 amounted to 231.5 thousand tons in 2017, which is 5.1 times more than in 2005, 2010, 2015 and 2016, 4.1 times, 2.8 times and 1.8 times more.

While smaller amounts of livestock and dairy products are reimbursed from imports, substantial portion of poultry and livestock feed needs are provided through imports. This means that feeding animals in the country depend on foreign currency.

toms policy in foreign economic activity is mainly implemented by customs tariff regulation method. Developing its economy on the basis of market principles, our Republic takes important steps to deepen international integration, benefiting from the experience of developed countries and deepening mutual cooperation with different countries. In order to provide more favorable conditions for domestic production, to protect the country's economy from negative effects of external competition, as well as to protect the interests of foreign and local entrepreneurs, a number of customs tariff regulation methods have been implemented in our Republic, with the aim of creating healthy competition conditions for foreign economic activity participants, a number ofwork has been done by the company. This includes improving the application of taxes and duties, enhancing their efficiency, and improving the mechanism of their receipt in the state budget. Also, reduction of import customs duties on different groups, contrary to increase of duties on certain commodity groups in the

Table 2.- Level of dependence on imports by certain types of products in 2010-2017 (percent)[3]

The name of the product 2010 2011 2012 2013 2014 2015 2016 2017

Grain Plants 43.5 35.2 35.7 36.1 39.4 35.5 36.5 33.7

Potato 6.8 8.3 7.8 7.7 15.7 14.8 18.1 16.5

All kinds of vegetables 7.0 9.5 5.7 3.1 3.4 3.4 5.1 3.8

Fruit and berry 22.4 12.3 10.1 4.9 3.6 9.6 12.6 12.7

Milk 29.6 29.1 27.5 24.3 23.9 16.0 12.6 14.6

Beef 5.5 12.9 8.9 14.8 13.2 8.8 6.6 13.8

Sheep meat 0.3 0.2 1.5 2.3 2.1 0.7 1.3 2.4

Bird meat 29.8 20.3 12.2 1.5 2.1 1.4 20.9 20.5

Eggs 2.1 22.6 4.2 0.1 0.3 0.3 1.2 0.0

country, increase of business relations with different countries, transfer of some goods to the simplified customs clearance system, etc. The solution of other issues has become an objective necessity.

As you know, customs tariffs are the only means of economic regulation in foreign trade relations that are applied in all countries, as well as in our country, covering all commodity groups. Customs tariffs play a major role in the effective regulation of imports and exports as well.

Another way to ensure economic security is the non-tariff regulation. At that time, foreign trade quota is applied, which is the limit on imports or exports.

Unlike the above-mentioned import duties, the use of quota will allow for more accurate import restrictions. For example, increasing import duties may result in an increase in the total amount of payments. However, this increase may not affect the amount of imports, but the quota implementation of the import can give positive effect if it is competing with the product on the domestic market.

In the modern era, our Republic has changed the tariffs sufficiently to ensure economic security based on all this. This gives the country owners the opportunity to direct domestic production to national production, namely Made in Azerbaijan brand.

References:

1. International Conference Materials Azerbaijan - After Independence, Qafqaz University - Baku 2003.28 p.

2. Shakaraliyev A. Sh., Shakariyeva Z. A Foreign-economic activity regulation of tariffs, - Baku, 2006.425.- P. 62-63.

3. The State Statistical Committee of the Republic of Azerbaijan URL:http: www.stat.gov.az

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