AZERBAIJAN - 2030: FROM THE MILLENNIUM DEVELOPMENT GOALS TOWARDS THE SUSTAINABLE DEVELOPMENT GOALS

VOLUNTARY NATIONAL REVIEW of the Republic of Azerbaijan on the first steps in the implementation of the 2030 Agenda for Sustainable Development

Drafted for submission to the High-Level Political Forum on Sustainable Development

BAKU - 2017

VOLUNTARY NATIONAL REVIEW - AZERBAIJAN

ACRONYMS AND ABBREVIATIONS

AIDA Azerbaijan International Development Agency AIDS Acquired Immune Deficiency Syndrome ANFES National Fund for Entrepreneurship Support of the Republic of Azerbaijan CBAR Central Bank of the Republic of Azerbaijan CIS Commonwealth of Independent States COM Cabinet of Ministers of the Republic of Azerbaijan ECO Economic Cooperation Organization EAS Economic Activity Survey GDP Gross Domestic Product IDB Islamic Development Bank HBS Household Budget Survey ICT Information and Communication Technologies IFAD International Fund for Agricultural Development ILO International Labour Organization MCT Ministry of Culture and Tourism of the Republic of Azerbaijan MDG Millennium Development Goal MOA Ministry of Agriculture of the Republic of Azerbaijan MOE Ministry of Economy of the Republic of Azerbaijan MOED Ministry of Education of the Republic of Azerbaijan MOF Ministry of Finance of the Republic of Azerbaijan MOH Ministry of Health of the Republic of Azerbaijan MOENR Ministry of Ecology and Natural Resources of the Republic of Azerbaijan MLSPP Ministry of Labor and Social Protection of Population of the Republic of Azerbaijan MOT Ministry of Taxes of the Republic of Azerbaijan NCCSD National Coordination Council for Sustainable Development of the Republic of Azerbaijan NCD Non-Communicable Disease NGO Non-Governmental Organization OIC Organization of Islamic Cooperation SCFWCA State Committee for Family, Women and Children's Affairs of the Republic of Azerbaijan SCRIDP State Committee for Refugees and Internally Displaced Persons of the Republic of Azerbaijan SDG Sustainable Development Goal SME Small and Medium-sized Enterprises SSC State Statistical Committee of the Republic of Azerbaijan TSA Targeted Social Assistance UN United Nations UNDP United Nations Development Programme UNFPA United Nations Population Fund UNICEF United Nations Children's Fund WB World Bank Group WHO World Health Organization WTO World Trade Organization

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TABLE OF CONTENT FOREWORD……………………………………………………………………………………….. 4 SUMMARY…………………………………………………………………………………………. 6 1. INTRODUCTION …………………………………………………………………………….. 8 2. THE PROCESS AND METHODOLOGY FOR PREPARING THE REVIEW…………. 9 3. PROGRESS MADE TOWARDS THE MILLENNIUM DEVELOPMENT GOALS…… 11 4. SUSTAINABLE DEVELOPMENT ISSUES IN THE DEVELOPMENT AGENDA OF AZERBAIJAN………………………………………………………………………………… 14 4.1. Initial situation and conditions…………………………………………………………….. 14 4.2. Policy measures for promoting the transition to a sustainable development model……… 20 4.3. The sustainable development issues in the long-term vision of country's development prospects…………………………………………………………………………………... 23 5. POLICY MEASURES AND FAVORABLE ENVIRONMENT ESTABLISHED FOR ACHIEVING THE SDGs…………………………………………………………………….. 26 5.1. Nationalization of the Sustainable Development Goals, targets and indicators and their integration into the national development agenda………………………………………… 26 5.2. Institutional mechanisms………………………………………………………………….. 28 5.3. Implementation tools and resources……………………………………………………….. 31 5.4. Ownership, participation and public awareness…………………………………………… 32 5.5. Monitoring, evaluation and accountability. ………………………………………………. 33 6. IMPLEMENTATION OF THE GOALS AND ACHIEVEMENTS MADE……………... 36 7. PARTICIPATION IN GLOBAL PARTNERSHIP FOR SUSTAINABLE DEVELOPMENT…………………………………………………………………………….. 61 8. WAY FORWARD…………………………………………………………………………….. 67 9. CONCLUSION……………………………………………………………………………….. 67 10. REFERENCES……………………………………………………………………………….. 70

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gold into human capital," is becoming reality. FOREWORD We are heading towards a During this period, the implementation of a number new future in a changing world. Intensification of of major socio-economic projects, including the scientific and technical progress and globalization opening of new jobs, creation of modern infrastruc- trigger revolutionary changes in all spheres of ture, the launch of high technology-based busi- public life. These developments are natural and nesses, support to entrepreneurship, steps taken to will happen regardless of how ready we are. What improve the business climate, as well as the was once viewed as science fiction is becoming country's role in initiating and implementation of reality, at an ever accelerating pace. Of course, large-scale transnational projects, accelerated the every change in the world, as well as every development process and boosted the country’s innovation brings about new challenges. As a global image. result, alongside the growth in global capabilities, Our country has also endorsed “Transforming our we are also experiencing a growth in challenges. World: The 2030 Agenda for Sustainable Develop- As such, people, countries, governments and inter- ment” (2030 Agenda), which entails 17 Sustainable national institutions have to work together to Development Goals (SDGs) and 169 associated respond to the challenges of the day and take targets, that were formally approved by the advantage of new opportunities to further Member States on 25-27 September 2015 at the developed our world. United Nations Summit on Sustainable Develop- Guided by this logic, Azerbaijan is closely ment and entered into force in January 2016. involved in the global development initiatives of The identified goals and targets cover economic, the international community, including the United social and environmental aspects of sustainable Nations (UN). This involvement is of great development. They are based on the progress made importance for learning and sharing the best towards the MDGs and set the global development practices and innovative ideas, and has been an direction towards 2030. As the SDGs are based on important factor in facilitating the successful such principles as “universality”, “integrated ap- implementation of the Millennium Development proach” and “leaving no one behind”, they serve Goals (MDGs) in Azerbaijan in the last 15 years. the prosperity and well-being of human beings. It Our country joined the Millennium Declaration in is expected that their implementation will bring 2000 and implemented a number of comprehensive more prosperity by providing dynamic economic measures to achieve the MDGs. These include the growth, and solutions to social and environmental adoption and successful implementation of the problems. State Programme on Poverty Reduction and Eco- The establishment of an effective national nomic Development in the Republic of Azerbaijan implementation mechanism is critically important, for 2003-2005 (SPPRED), the State Programme on given the need for a comprehensive approach to Poverty Reduction and Sustainable Development implement the institutional and policy aspects of in the Republic of Azerbaijan for 2008-2015 the SDGs and the need for the development of a (SPPRSD) and a number of other supporting stable, comprehensive and diversified economy, a programmes and policy documents. As a result, the balanced development of the social sectors and the country has made a significant progress in preservation of ecological balance. Taking into achieving numerous targets under the MDGs, parti- account the above-mentioned, and with the purpose cularly in reducing poverty, increasing education of coordinating the implementation of tasks assi- level, addressing gender equality issues and envi- gned to each government agency with respect to ronmental protection, reducing child and maternal the obligations arising from 2030 Agenda, the mortality rates, strengthening the fight against dan- President of the Republic of Azerbaijan issued the gerous infectious and other diseases, and expan- Decree on October 6, 2016 to establish the ding participation in global partnership for prospe- National Coordination Council for Sustainable rity. The most important result achieved is the Development of the Republic of Azerbaijan elimination of extreme poverty and reduction of (NCCSD). the absolute poverty rate from 49% in 2001 to Identification of the nationally important priori- 4.9% by 2015. ties and relevant indicators in line with the global At present, ensuring of the dynamic and goals and targets, ensuring alignment of the state sustainable growth of the non-oil sector is a key programmes and strategies in the country's socio- focus in the country's development strategy. The economic areas with the SDGs, as well as the idea, raised by the Head of State, to "convert black preparation and submission of national progress

4 VOLUNTARY NATIONAL REVIEW - AZERBAIJAN reports for the country’s leadership and High-Level immediate and unconditional withdrawal of the Political Forum on the country’s achievements occupying forces from all occupied territories of towards the SDGs have been identified as key tasks Azerbaijan, and in flagrant violation of of the Council. international law, Armenia continues its purposeful Over the last, the Secretariat of the National efforts towards consolidating the current status-quo Coordination Council was established, four of the occupation, strengthening its military build- working groups were formed (on economic up in the seized territories and preventing the development and decent employment, social and hundreds of thousands of forcibly displaced environmental issues, as well as monitoring and Azerbaijanis from returning to their homes and evaluation, respectively) and other preparatory accessing properties in those areas. The resolution measures had been taken. of the conflict would not only bring stability and Azerbaijan submits its first Voluntary National progress to both Armenia and Azerbaijan, but Review on the implementation and progress made would also ensure peace and justice in the entire towards the SDGs. 2030 Agenda identifies the region. problems faced by people around the world and In addition, it requires stepping up efforts in the calls for a joint solution. In this regard, the SDGs development and diversification of the non-oil resonate broadly in Azerbaijan. Despite of global sector of the national economy, strengthening and regional conflicts, poverty, environmental export capacity and increasing exports, improving degradation and problems such as crime, the efficiency of healthcare and social services, and Azerbaijan makes confident steps towards strengthening environmental protection. We achieving peace and a decent life, and is committed believe that the international partners will also to achieve the targets set by the SDGs. support our activities in these areas. Long-lasting peace, security, stability and social In general, we believe that the SDGs form a cohesion are the major pre-requisites for favorable platform for the joint work of sustainable development. However, the military government agencies, civil society and businesses, aggression of Armenia against Azerbaijan does not academia, research and educational institutions, allow making any major progress in the region. international development agencies, and mass Despite of the resolutions of the United Nations media. Corresponding initiatives, guiding and Security Council 822 (1993), 853 (1993), 874 supporting activities of the United Nations (1993) and 884 (1993), condemning the use of Agencies, should be also highlighted. We are force against Azerbaijan and occupation of its confident that this cooperation will continue in the territories, reaffirming the sovereignty and future and play an important role in achieving territorial integrity of Azerbaijan and calling for SDGs.

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non-oil GDP in real terms grew by 4.0 times, the SUMMARY This review describes the investments grew by 12.4 times; the development initial conditions and progress made towards the of the non-oil sector helped to create new jobs and SDGs in the Republic of Azerbaijan, including the expand income opportunities for the population, achievements of the MDGs, the conformity of the unemployment rate decreased by 5.9 percen- sustainable development issues to the country's tage points from 10.9% to 5%, the low level of development agenda, the main challenges, current inflation was secured (which, according to the hurdles and way forward. results of 2015, was 4.0%), the minimum social Along with other 192 UN Member States, the standards and income levels rose by multiple times Republic of Azerbaijan endorsed the 2030 Agenda and so on) and the most of the targets under the for Sustainable Development on 25-27 September MDGs were achieved before the deadline. 2015 at the UN Sustainable Development Summit Specifically, the analysis and the assessment of in New York and initiated the implementation of data collected on the monitored indicators [2] show the SDGs. Introduction of the timeframes and that in 2000-2015 extreme poverty in the country application of a result-oriented approach, build was eliminated (at the beginning of the period, confidence that the SDGs will boost global deve- extreme poverty was 10.0% and in 2007 it lopment. Thus, the SDGs are expected to change decreased to 0.1%), absolute poverty dropped from the living standards of billions of people around the 49.0% to 4.9%, enrolment rate in the primary, world through the adaptation of these goals to local elementary and high education reached 99.8-100%, conditions and the establishment of a link with the significant progress was made on gender equality relevant national policies of governments. By and women's empowerment, the number of under-5 focusing on a limited set of measurable targets, the child deaths per 1000 live births dropped from 30.5 SDGs will help to increase the foreign aid and to 13.3, infant and maternal mortality rates improve the efficiency of its distribution, coordina- significantly fell, the fight against infectious and te global and national priorities, mobilize the other diseases was strengthened, malaria was fully efforts around these priorities and achieve signifi- eliminated, each year the number of people cant results. infected with tuberculosis and other diseases and The analyzes used in this area show that during associated mortality rate decreased, and substantial over last period the Republic of Azerbaijan carried steps were taken to ensure environmental out a successful policy towards the MDGs. This is sustainability and the enhancement of international illustrated in the adoption and implementation of partnerships for development. targeted policy documents, such as the State In this regard, the assessment of the Director- Programme on Poverty Reduction and Economic General of FAO Jose Graziano da Silva is note- Development for 2003-2005 (SPPRED), The State worthy. He emphasized that amongst 128 countries Programme on Poverty Reduction and Sustainable with an obligation to halve poverty within the Development for 2008-2015 (SPPRSD), a wide framework of the MDGs, Azerbaijan was greatly range of state programmes for the socio-economic successful, due to becoming one of 18 countries development of the regions, Baku and its suburbs which fulfilled this obligation and additionally as well as specific state programmes on the MDGs, becoming one of 29 countries which succeeded in the implementation of necessary reforms in keeping poverty below 5%.[11]. relevant areas, the legislative framework (different The Government of Azerbaijan continues to regu- laws and regulatory acts were adopted on the cost larly take steps required in building upon this prog- of living, targeted social assistance, social benefits, ress, as well as adopting relevant policies and imp- pensions and other issues) and the creation of new lementing a range of measures. The following institutional mechanisms. documents are of key importance with regards to As a result, according to the data of the State conformity to the SDGs: Statistical Committee (SSC), the macroeconomic -"Azerbaijan 2020: Look into the future" stability achieved in 1996 was further strengthened Development Concept. The main priorities of the in 2001-2015; the dynamic social-economic concept include the following: formation of a growth that started in 1997 ensured the continuity highly competitive economy; development of of socio-economic sustainability (during the past information and communication technologies and 15 years the country's GDP in real terms increased ensuring the transition to an information society; by 4.5 times or at an annual average of 10.6%, human capital development and building of an GDP per capita in real terms grew by 3.8 times, effective social security system; improvement of

6 VOLUNTARY NATIONAL REVIEW - AZERBAIJAN legislation and institutional capacity building; other activities required to achieve the goals. development of civil society; preservation and During the preparation of this review, efforts effective management of cultural heritage; ensu- were made to align the SDGs with the national ring environmental protection and ecological development agenda, increase the effectiveness of balance [1]. management in the relevant state agencies which -A total of 12 strategic road maps approved pur- are in charge of policy planning and execution in suant the Decree of the President of the Republic various areas, improve coordination between them of Azerbaijan (dated 6 December 2016) on Appro- and develop capacities and skills necessary for ge- val of the Strategic Roadmaps on National Eco- nerating, analyzing and processing data. To the nomy and Key Sectors of the Economy, including end, the working groups were formed with the a roadmap on National Economy and 11 roadmaps participation of the relevant state agencies. on priority sectors of economy (oil and gas Indus- Another main problem is the lack of detailed try (including chemical products); agricultural pro- indicators for a number of areas. This impedes the duction and processing; production of consumer creation of a comprehensive monitoring system on goods by small- and medium-sized enterprises; the SDGs. On the other hand, while identifying the heavy industry and mechanical engineering; spe- indicators, the need for collecting data across a cialized tourism Industry; logistics and trade; variety of areas and improvement of national affordable housing; vocational education and statistics was recognized. training; financial services; telecommunications Cooperation with the United Nations Office in and information technologies; utilities (power and Azerbaijan plays a pivotal role in bridging the exis- thermal energy, water and gas)) [10]. ting gaps and strengthening the government’s capa- In addition, special emphasis was placed on city. The support of top-notch UN experts and qua- sustainable development issues in a number of lified staff was instrumental in the Government’s cooperation documents signed with international preparation of the present review. partners. The most comprehensive one is the Based on the above mentioned, we firmly believe United Nations-Azerbaijan Partnership Framework that coordinated and results-oriented activities un- (UNAPF) for 2016-2020 which was signed on 12 dertaken by national governments, UN Agencies, July 2016. The UNAPF development process took international development organizations and other into account the national priorities set out in partners for achieving SDGs may result in a Azerbaijan 2020 as well as post-2015 goals. The successful experience. document identified three interrelated strategic Azerbaijan welcomes ongoing discussions on the priority areas: 1) Promoting sustainable and inclu- nationalization of the SDGs and planning of sive economic development underpinned by comprehensive coordination procedures for the increased diversification and decent work; 2) acceleration and tracking of implementation of Strengthening institutional capacities and effective these goals as the best international practices. public and social services; 3) Improving environ- Another interesting aspect is effective co-operation mental management and resilience to hazards and established between public and private institutions, human-induced disasters [4]. civil society, Academia and research institutions, The priorities reflected in the abovementioned and other stakeholders and mobilization of their documents are consistent with the SDGs. The capacities for achieving the SDG targets. current policies and other measures taken to In the upcoming period, Azerbaijan needs to achieve these goals in the country lay a foundation strengthen the capacity for generating and analysis for the Republic of Azerbaijan to take a leading of data disaggregated by gender, age, place of position in achieving these goals and making a residence (rural/urban), sectors and regions/admi- solid contribution to the common cause of the nistrative regions, and also needs support in the global community. development and implementation of specific pro- Similar to other signatories of 2030 Agenda, jects which will feed into the progress towards Azerbaijan started the implementation process by more ambitious SDG targets. adapting the SDGs to the local conditions, setting Note: Data with no source of reference in the baselines, targets and monitoring indicators, as review were provided by the State Statistical Com- well as identifying necessary policy measures and mittee. The 2016 statistical data is provisional.

7 VOLUNTARY NATIONAL REVIEW - AZERBAIJAN mia and research institutions, civil society, interna- 1. INTRODUCTION tional partners and etc. This Voluntary National Review has been Part 3 provides brief information on alignment of prepared to assess the status of the sustainable the MDGs with national development strategies development issues, from the point of perspectives and priorities, policy documents adopted within of the long-term development of the Republic of this framework, actions taken for achieving the Azerbaijan, as well as the policy documents and MDGs, the major achievements of each MDG, and actions which are supporting the transition to the activities aimed at addressing the emerging sustainable development models in the country. challenges. The review captures the measures taken with Part 4 reflects the initial situation and conditions respect to nationalization of the SDGs, and targets in the country in with the implementation of the and indicators, incorporation of the SDGs into the SDGs, policy measures undertaken to promote national development agenda, institutional transition to the sustainable development model, mechanisms, implementation tools and resources. the integration of sustainable development issues It also highlights ownership, participation and into the long-term vision of the country’s develop- raising public awareness, monitoring, evaluation ment prospects, including issues on the integrated and accountability issues. The review assesses the approach to three dimensions of the sustainable current situation in the implementation of the development. SDGs in the country and the progress made, par- Part 5 focuses on the issues of nationalization of ticularly in strengthening the international partner- the global goals and SDG targets and indicators, ship, sharing the best practices and lessons learned, integration of the SDGs into national development as well as the emerging challenges and areas that agenda, institutional mechanisms, implementation require support. tools and resources, ownership, participation and The review consists of the following parts: public awareness, monitoring, evaluation, and The “Foreword highlights the government’s accountability. position on sustainable development and provides Part 6 captures the results of analysis and brief information on the planned works and assessment in achieving the SDGs and progress prospects, along with the key points mentioned in made in eradicating poverty and promoting the Summary. prosperity in a changing world", in line with the The Summary captures the issues stemming from theme of the High-level Policy Forum 2017. the content, including the primary conditions Part 7 describes results achieved in the imple- available for achieving the SDGs in the Republic mentation of SDG17, the actions taken, emerging of Azerbaijan, as well as progress made towards challenges and suggestions on solutions. the MDGs, alignment of the sustainable develop- Part 8 informs about the measures undertaken ment with the country’s development agenda, the and planned actions to strengthen efficiency of the actions taken for the implementation of the 2030 activities aimed to implement the 2030 Agenda. Agenda”, achievements made, the existing and Part 9 reflects major findings of the analysis, po- emerging challenges, and next steps. licy recommendations in the relevant areas, expe- Part 1 outlines objectives pursued by the review riences gained, challenges addressed, and support development, its structure and content. that could be required for the development of the Part 2 reflects the methodology and information similar reports. resources which were used for preparing the Part 10 indicates the reference sources which review, including support of the government bo- were used for preparing the review. dies, representatives of the private sector, Acade-

8 VOLUNTARY NATIONAL REVIEW - AZERBAIJAN 2. THE PROCESS AND and institutional mechanisms, implementation means and resources, as well as monitoring and METHODOLOGY FOR PREPARING evaluation, and accountability. Thematic analysis; THE REVIEW Participation in global partnership for The review was prepared by the initiative of the sustainable development; NCCSD and support of the United Nations Office. Way forward: This part outlines the important The process of preparation of the review was actions to be taken for strengthening the SDGs guided by the NCCSD Secretariat and Working implementation process; Groups consisting of representatives of the Conclusion: This part includes the analysis, concerned ministries, Academia and research insti- summary of findings, and policy measures; tutions, NGOs, private sector, international References partners and other concerned parties was involved Review preparation process: First of all, the to this process. The review was prepared with plan and methodology for the review development support from UNDP. was prepared. Upon its approval by the relevant Methodology for preparing the review is based authorities, the first draft review was prepared and on the “Proposal for voluntary common reporting circulated to the counterparts for feedback, which guidelines for voluntary national reviews at the was generated by joint discussions. Following the high-level political forum” [12] which was consultations, the final draft review was prepared provided in the Annex to the UN Secretary- based on the comments received from the counter- General Report A/70/684 and other guiding docu- parts as well as recommendations provided during ments [13; 14]. In compliance with the abovemen- the discussions. The final draft was submitted to tioned guidelines, the structure and content include the relevant authorities and, upon the receipt of the the following parts: approval, it was circulated to the concerned parties. Foreword: This part focuses on the key messages In this context, the given below information was arising from the Voluntary National Review and collected, systematized, analyzed and consolidated challenges faced during the implementation of the with the support from the counterparts: key policy 2030 Agenda in Azerbaijan; documents, regulations and other information on Summary: This part captures information about the implementation of the SDG targets that are the process and findings of the review, highlighting relevant for Azerbaijan, achievements made, the the best practices, the lessons learned, the best practices that could be shared with other coun- challenges and areas that would need support; tries, the lessons learned which could be helpful Introduction: This part outlines the purpose, achieving the SDGs, challenges arising during the structure and the content of the review; implementation process and measures taken to ad- The Process and methodology for preparing the dress them, and information on the support requi- review: This part reflects information on the scope red (technical, and financial). As part of the Rapid of the review, development characteristics, used Integrated Assessment, national policy documents methods and information sources, progress made, (strategies, programmes, plans and etc.) were re- the government support, participation of the con- viewed. Analyses as well as quantitative and quali- cerned parties, coordination of national platforms tative assessment of statistics and administrative and processes, and challenges faced during the information on the SDG indicators were carried review preparation process; out, next steps were identified, and the conclusions Progress made towards the MDGs; were made. Sustainable development issues in the develop- During the review preparation process, the Rapid ment agenda of the Republic of Azerbaijan: This Integrated Assessment tools, review of the per- part outlines the initial situation and conditions, po- formance gaps, composite indexes and panels, the licy measures promoting transition to the sustain- SDGs related analysis tools were used, along with able development model; the integration of sustain- the traditional analytical-statistical and qualitative able development issues into the long-term vision analysis and evaluation tools. of the country’s development prospects; Information provision: the SDGs related scien- Policy measures and creating a favorable envi- tific-theoretical and practical literature, resolutions, ronment: This part focuses on the SDGs and declarations and other official documents adopted nationalization of targets and indicators, integrating by UN Agencies, regulations, recommendations the SDGs into the national development agenda and other administrative information, materials on

9 VOLUNTARY NATIONAL REVIEW - AZERBAIJAN the best practices of other countries, including their Review development stage: This stage focused relevant reports, laws, legal acts, strategies, con- on conducting the required analysis and formula- cepts, programmes and other official documents ting the consultations, in compliance with a plan adopted in the Republic of Azerbaijan, available approved by the management team, preparation of reviews and reports were broadly used during the the summary of the initial results (first draft) and review preparation process, as well as information their submission to the concerned authorities, as on the progress made in achieving the SDG targets well as development and submission of the final that are relevant for Azerbaijan, particularly statis- draft, which incorporated the comments and re- tics and administrative information on the more commendations received. challenging indicators which were provided by the Finalization stage: During this stage, the final SSC, the concerned ministries, and other draft review was approved by the management government bodies. team, and the report was circulated to key counter- Credibility provision: Various verification parts. methods were used during the review preparation The review will be submitted by the Government process to ensure the required depth and reliability of Azerbaijan at the High-Level Policy Forum and of the collected administrative information and is regarded by the counterparts and stakeholders as statistics. In order to ensure accuracy and quality of the first major document developed in the process the review content, both qualitative and quantitati- of inclusive reporting on the SDGs. ve tools were used, whereas the information sour- Emerging challenges: The challenges faced ces and conclusions were validated by the working during the review preparation process were mainly groups, experts and a coordination group). due to unavailability of the information on a num- The review development process could be divi- ber of indicators, or a relevant methodology. In ded into the given below 3 stages: some cases, available information was not disag- Preparation stage: This stage included the gregated by gender, age groups, residency collection, systematization and review of the docu- (urban/rural), or administrative/regional zones. ments, materials, and information used in the This has resulted in the limitations in the scope and review, as well as identification of the plan, metho- the depth of analysis, assessment, and conclusions. dology, and discussions with the concerned parties.

10 VOLUNTARY NATIONAL REVIEW - AZERBAIJAN 3. PROGRESS MADE TOWARDS monitored and evaluated. The SPPRED was follo- wed by State Programme on Poverty Reduction THE MILLENNIUM DEVELOPMENT and Sustainable Development” (SPPRSD) for 2008-2015, pursuant to the Decree of the President

GOALS of the Republic of Azerbaijan dated 15 September, The Republic of Azerbaijan, along with other UN 2008. Aligned with the MDGs, the SPPRSD was Member States, adopted the Millennium Declara- also successfully implemented. tion, which encompassed eight Millennium Deve- The implementation of these Programmes was lopment Goals (MDGs), at the UN Millennium supported by other policy documents, measures Summit held in New York on 6-8 September 2000, and activities. Azerbaijan managed to make visible which aimed at determining a general framework progress towards the MDGs (see table 3.1). for creating in positive changes in the lives of Despite some deficiencies as seen from the Table people all around the world until 2015. 3.1 such as a misbalance in the issues on income, Like other countries which signed Millennium rural/ urban, regional and gender (gender balance Declaration, the Republic of Azerbaijan initiated in the Parliament and senior positions). Azerbaijan activities on the MDGs, in compliance with nati- made impressive progress in reducing poverty, onal development priorities, including determina- achieving universal education, reducing maternal tion of baselines, targets, monitoring indicators and and infant mortality, strengthening the fight against targets, and initiated identification of policy mea- dangerous infectious and other diseases, and sures to achieve the goals. In order to ensure a pur- ensuring environmental sustainability. poseful and systematic implementation of the Furthermore, by paying special attention to the MDGs, a special state commission was set up pur- least developed countries, Azerbaijan successfully suant to the Decree of the President of the Republic demonstrated its increasing role in strengthening of Azerbaijan dated 2 March, 2001. Chaired by the international cooperation. Prime Minister, the commission was entrusted with The government of Azerbaijan is building on the the development of the State Programme on Pover- progress made towards the MDGs and is taking ty Reduction. An interim document was prepared, measures aimed at reducing dependence on oil and within a short period of time. The document was gas revenues, eliminating gaps in income and discussed and approved by both national and gender as well as reducing urban rural disparities. international partners in July 2001. The Ministry of Economy (former Ministry of The development of the major document was ini- Economic Development) was the coordinating tiated thereafter. To this end, 15 sectoral working government agency, which was overseeing and groups composing representatives of the govern- monitoring the implementation of the MDGs. ment, Academia, research institutions and civil While fulfilling on the MDGs related commit- society were set up. A Secretariat consisting of na- ments, the Ministry of Economy closely coopera- tional and international experts was set up under ted with the SSC, concerned ministries and other the auspices of the Ministry of Economic Develop- government institutions, Academia and research ment (presently the Ministry of Economy). As a institutions, civil society and international develop- result, the State Programme of the Republic of ment institutions, especially with representative Azerbaijan on Poverty Reduction and Economic offices of UNDP, WB, and IMF in Azerbaijan. The Development (SPPRED) for 2003-2005 was prepa- MDG progress reports were prepared with red. The Programme was of a general character and technical support from UNDP. didn’t specify the sectors of development, or the The authorities that were in charge for the process regions. Upon the approval of the Programme by of achieving the MDGs encountered main challen- the Decree of the President of the Republic of ges due to some duplication between local and in- Azerbaijan on 20 February, 2003, its implementati- ternational partners, weaknesses in collection on was successfully finalized. process of statics and administrative data important All the Programme measures had funding sources for monitoring and evaluation resulting in genera- envisioned in the Middle-term Expenditure Strate- ting data gaps, especially it refers to data collection gy, and monitoring indicators were determined for on gender issues, age groups, living places (urban/ evaluating and monitoring. While developing the rural), sectors and regional/administrative districts SPPRED, its goals were aligned with the MDGs. classification (being disaggregated). To eliminate The SPPRED covered a three-year period (2003- the challenges, the SPPRED Secretariat and wor- 2005), and each year the undertaken measures were

11 VOLUNTARY NATIONAL REVIEW - AZERBAIJAN king groups, jointly with national counterparts and those joint interventions were very successful and international partners implemented projects aimed could be considered as best practices. at strengthening the institutional capacities, and

Table 3.1. Summary of the achievements on MDGs Goals The major achievements Goal 1: Eradicate Extreme poverty and hunger are not longer relevant for Azerbaijan. The extreme poverty government policy was aimed at reducing the absolute level of poverty. In and hunger accordance with the HBS held by the SSC, the level of absolute poverty reduced from 49.0% to 4.9% in the country during 2001-2015, whereas the level of extreme poverty reduced to the unbelievable level (<0.1). During the years of 2003-2015, the share of the poorest quintile consumption increased from 12.2% to 15.4%. The share of under-weighted children under 5 years, dropped from 6.8% to 0.6% during 2001-2015. Goal 2: Achieve The goal has been already achieved. Although the country has high indicators in universal primary this area, some of the indicators kept improving in the recent years. education During 2000-2015, the level of education among 15-24 aged persons has been increased by 100% and the mentioned indicator is similar both for women and men. In 2000-2015 years the net enrollment ratio in primary education increased to 99.8%. The mentioned indicator has increased to 99.9% among men and to 99.7% among women In 2000-2015 years the ratio of primary education finalization increased from 92.8% to 100% This indicator increased to 100% among men and to 99.9% among women. Goal 3: Promote There is some progress in gender equality in the envisioned targets gender equality During 2000-2015, the level of female unemployment reduced more than by and empower twice, decreasing from 12.7% to 5.9%. women In 2015 year, the Gender Parity Index on education enrollment rate made 0.99, at higher education - 0.99 and secondary education - 1.07. During 2000-2015, the number of women in the Parliament increased from 10.7% to 16.8%. Goal 4: Reduce During 2000-2015, the infant mortality rate of children up to 5 years among each child mortality 1000 live births reduced from 30.5 to 13.3. During 2000-2015, the infant mortality rate (out of 1000 live births) reduced from 16.4 to 11.0. During 2000-2015, the level of vaccination against measles for 1-year-old children was at 98.1%. Goal 5: Improve During 2000-2015, the maternal mortality level (death rate for every 100,000 maternal health live births) decreased from 37.6 to 14.4. During 2000-2015, the proportion of birth delivery with the participation of qualified medical personnel has increased from 92.1% to 99.8%. Goal 6: Combat By the end of 2015, the total number of HIV / AIDS infected people registered in HIV / AIDS, Azerbaijan made 5,629 people, whereas among citizens made 5,439 people, the malaria and other share of the population living with HIV is 0.06%. diseases During 2000-2015, the cases of malaria (per 100,000 populations) decreased from 19.4 to 0. During 2000-2015, cases of tuberculosis infection (per 100,000 people) reduced from 178,6 to 101,1; a record rate from 64.5 to 41.9, mortality rate dropped from 5.1 to 14.9.

12 VOLUNTARY NATIONAL REVIEW - AZERBAIJAN Goal 7: Ensure During 2000-2015, as a result of sustainable afforestation and reforestation environmental activities, the total area of forest land recorded 12.0% of the country's territory. sustainability At the same time, in order to protect the biodiversity, the total land area of the protected nature land areas increased by more than 2 times, from the rate of 5% to 10.3% (4298.6 square kilometers to more than 8925.5 square kilometers). The share of the population with access to improved drinking water reached 89.2% in 2015. The share of the population with access to improved sewerage services increased up to 94.3% in 2015. The essential works have been carried out on resettlement of the people living in the uninhabitable living areas (with limited access to normal housing, as well as sewage and other services), especially refuges and internally displaced persons, to houses with the normal living conditions, renovation of such venues and making them inhabitable, cleaning dumps. As a result, the ratio of refugees and displaced persons living in “suitable” places increased up to 60.0% in 2015. Goal 8: Develop During 2005-2015 the ratio of the Internet users per 100 people increased from 8 a global to 77. partnership for During 2005-2015, the ratio of personal computers per 100 people increased progress from 15.0 to 69.9 During 2000-2015, the ratio of wired telephone lines per 100 people increased from 10 to 16. During 2000-2015, the ratio of mobile phone numbers per 100 people increased from 5.3 to 112. During 2000-2015, unemployment rate among youth (15-24) decreased from 22.0%. up to 13.4%. This indicator dropped from 25.4% to 15.8% among women. Source: [2, 5; 6; 11]

At the same time, the capacity of the civil society the Republic of Azerbaijan was established and a was strengthen to ensure the CSO’s participation in "Long-term strategy for the management of oil and MDGs implementation process. While developing gas revenues" was adopted; progress reports on the MDGs, the relevant targets -Azerbaijan has a comparative advantage in and indicators were analyzed. The indicators of human resources. The country’s overall literacy each MDG in Azerbaijan were compared with the rate is high and the government is taking additional baseline of 1990. Some important studies which measures to investment in human capital. The State were conducted by the research institutions, contri- Programme on Education of Azerbaijani Youth buted to bridging the data gaps during the monitor- Abroad for 2007-2015" was approved by the ring processes. All the efforts made by the Govern- Presidential Decree dated 16 April 2007. The ment and partners, helped develop capacities Programme was successfully implemented; required to meet the global development agenda. -The implementation process of the SPPRED and These capacities and experiences are regarded as a SPPRSD helped Government of Azerbaijan positive step in the process of achieving the SDGs. strengthen fruitful cooperation with international The analysis of the MDGs related progress made development partners; in Azerbaijan demonstrated the below listed terms -Azerbaijan demonstrated its determination in achievements: promoting good governance and adopted additional -By demonstrating political will in achieving the national MDG. The Government of Azerbaijan MDGs in Azerbaijan, country-specific targets and involved civil society in the process of achieving indicators on the MDGs were identified and the MDGs and created viable partnership with the integrated into the national development strategy CSOs. via adoption of the state programmes (SPPRED Encouraged by the progress made towards the and SPPRSD); MDGs, the Government of Azerbaijan is -By demonstrating political will in efficient determined to apply the experience in the SDGs spending of the oil revenue, the State Oil Fund of implementation process.

13 VOLUNTARY NATIONAL REVIEW - AZERBAIJAN

4. SUSTAINABLE DEVELOPMENT aggravated socio-economic problems in the Republic of Azerbaijan, like in all post-socialist ISSUES IN THE DEVELOPMENT countries, thereby causing a sharp decline in the AGENDA OF THE REPUBLIC OF income and living standards of the population. AZERBAIJAN According to the SSC data, GDP dropped by 52.5%, industrial production by 61.7%, agricultural

production by 41.3% and consumption by 86.5% in 4.1. INITIAL SITUATIONS AND CONDITIONS 1994 compared to 1990; gold and foreign exchange

reserves of the country depleted and the annual Along with specific target-oriented measures, inflation stood at 1,763.5%. As a result, the real there are a number of general factors including average monthly wages of those employed in the baseline and initial conditions, which affect the country dropped by 83.7% and per capita real achievement of SDGs. monetary income dropped by 3.9 times. Background. Upon restoration of independence During this period, the Republic of Azerbaijan in 1991, Azerbaijan went through a dynamic experienced severe political (political instability in development process where it transitioned from 1991-1993), military (military aggression of planned to market economy and became an upper- Armenia against Azerbaijan) and economic prob- middle-income country. Benefiting from growth lems (sudden interruption of decades-long trade that was triggered by revenues obtained from oil and industrial relations between the former allied and gas exploration and export within two last republics led to a sharp decline in production, most decades, it remained one of the most rapidly enterprises had to limit or stop their operations, developing economies in the world and it took a huge number of workers were dismissed, salaries few years to become a country with proven success and wages that made up the main portion of the in the region. population’s income dropped in real terms and the The efforts made in 2001-2015 by Azerbaijan inflation escalated into hyperinflation) that added with a view to attain MDGs boosted further socio- to the existing difficult situation. economic development in Azerbaijan. Within this Taking advantage of the political developments period, the poverty rate dropped from 49% to and chaos in late 1980s, Armenia launched a 4.9%, and extreme poverty and hunger was planned ethnic cleansing and a forcible deportation eradicated (the situation in this area is similar to of more than 350,000 Azerbaijanis from their that in developed countries where the share of historical permanent places of residence (from the undernourished population amounts to less than present Republic of Armenia) that turned them to 5% of total population. Compared to 2000, the life refugees. Simultaneously, Armenia committed a expectancy at birth, mean years of schooling and military aggression against Azerbaijan in early expected years of schooling in Azerbaijan rose in 1990s and occupied 20% of its territories (former 2015 by 3.4 years, 0.6 years and 2.3 years respec- Nagorno-Karabakh Autonomous region and 7 tively. In 2010, Azerbaijan was removed from the surrounding districts). More than 789,000 people group of medium human development countries from the occupied territories of Azerbaijan and and included in high human development group. In more than 110,600 people from the settlements 2014 and 2015, Azerbaijan ranked 78th among 188 bordering Armenia and occupied territories were countries for Human Development Index (0.751 in forced to leave their permanent places of residence 2014 and 0.759 in 2015). Azerbaijan’s HDI has before becoming IDPs. During this military aggres- exceeded mean HDI of European and Central sion, 20,000 Azerbaijanis were killed, 100,000 Asian countries since 2010. Azerbaijan’s HDI was were injured, 50,000 became disabled, more than 0.759 in 2015, while the figure was 0.756 for 6,000 went missing or taken hostage and more than European and Central Asian countries [15]. a million Azerbaijanis were ousted from their his- Initial political and socio-economic conditions. torically native places of residence and thus During the early years of independence, the socio- became refugees or IDPs. Armenian military forces economic development of the Republic of Azerbai- completely destroyed 900 settlements, 150,000 jan was strongly affected by the political and socio- houses, 7,000 public buildings, 693 schools, 855 economic processes that followed the collapse of kindergartens, 11 vocational schools, 9 colleges, 1 the Soviet Union. Transition processes led to a dec- higher educational institution, 2 branches of higher line in the production output, a decrease in the educational institutions, 695 healthcare facilities, number of jobs, a rise in the inflation rate, and 927 libraries, 44 temples, 9 mosques, 473 historical

14 VOLUNTARY NATIONAL REVIEW - AZERBAIJAN monuments, palaces and museums, 40,000 capacity of cooperation in the region. museum exhibits, 6,000 industrial and agricultural Demographics. As is known, demographic enterprises, 2,670 km long highways, 160 bridges, processes have a significant impact on the socio- 2,300 km long water pipelines, 2,000 km long gas economic development of a country. According to pipelines, 1,200 km long irrigation schemes and the analyses performed, the socio-economic 15,000 km long electricity lines. 280,000 ha of reforms implemented in the Republic of Azerbaijan forests and 1 million ha of farming lands became following restoration of its independence and in the useless due to the invasion. According to the past 20 years in particular, improved the demog- estimates made, with contribution of international raphic situation of the country, increased the experts, by a Working Group of 15 members average life expectancy and enabled a positive net formed under the Cabinet of Ministers’ Resolution migration rate. According to the SSC data, the No. 51s of February 26, 2014, the pecuniary and population in the country grew by 22.1% compared non-pecuniary damages suffered by Azerbaijan as to 2000 (at an average annual growth rate of a result of Armenia's military aggression amount to 1.23%) and reached 9,810,000 by the beginning of hundreds of billions of US dollars [24]. 2017, thereby exceeding the preceding year by In addition to the pecuniary and non-pecuniary 1.08% (9,705,600 people in 2016). As per the data damage, more than 1 million people expelled from for the beginning of 2017, 49.86% of the their native lands lost their jobs thereby leading to population are male, 50.14% are female, and 53.0 emergence of an “army” of unemployed in the % live in urban areas while 47.0% live in rural country and, naturally, this affected the unemploy- areas. The number of urban population has ment rate and ultimately the poverty rate in the increased by 26.58% and rural population by country (the absolute poverty rate among IDPs was 17.46% in 2000-2017 [27]. In the reporting period, 63.0% in 2001 [5]). As a result, literacy, healthcare the growth rate of urban population exceeded that and employment rates among refugees and IDPs of rural population thus indicating the acceleration dropped below the average for the country, which of urbanization processes in the country. had an adverse effect on the human development in The Republic of Azerbaijan is one of few the country. countries with young age structure among The ongoing aggression policy of Armenia European and CIS countries. According to the SSC continues to hamper Azerbaijan's ability to make data for early 2017, the share of young people greater achievements. Besides, Armenia’s aggres- (aged 15-29) in the age structure of the population sive policy has resulted in a fragmentation in the was 25.0% (26.0% in 2000) and 22.6% for children region thereby impeding full realization of the (aged 0-14 years) (31.7% in 2000) (Figure 4.1).

Figure 4.1. Population dynamics by age (beginning of the year, to total population, %)

Source: SSC [2].

15 VOLUNTARY NATIONAL REVIEW - AZERBAIJAN Figure 4.1 shows that the share of children (0-14 increase was constant up to 2012, followed by a years) fell by 9.1 percentages in 2000-2017. This downward trend since 2013 and as a result, there decline was constant up to 2012, followed by an was a decline of 1.0 percentage in 2017 compared upward trend since 2013 and as a result, there was to 2012. an increase of 0.4 percentage points in 2017 as The higher birth rate per 1,000 population (16.85 opposed to 2012. Moreover, the share of people persons per year in average) in the country and the aged 65 and over increased by 1.1 percentages lower death rate (5.94 persons per year in average) from 5.2% to 6.3% in 2000 - 2017, which in 2000-2015 ensured high natural increase rate of characterizes the population's aging trend. The population (10.9 persons per year in average). share of population for the age group of 15-64 These figures in 2016 were 16.5, 5.9 and 10.6 went up by 8.0 percentages (considerably) from persons respectively [Figure 4.2]. 63.1% to 71.1% in the mentioned period. This

Figure 4.2. Natural increase rate of population (per 1000 person)

18.0 15.4 14.6 16.0 14.0 14.0 14.3 13.3 13.4 13.1 13.4 13.0 12.7 12.6 14.0 12.4 13.5 11.3 13.0 12.8 12.5 12.2 12.0 11.7 9.9 9.6 9.7 11.3 11.5 11.4 11.3 10.7 11.8 10.6 10.0 9.9 11.2 11.6 11.6 8.8 10.0 10.0 10.3 10.1 8.1 8.0 9.6 9.9 8.0 7.9 9.0 8.4 6.0 7.6 6.4 6.4 6.3 6.2 4.0 2.0 0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Urban places Rural places Total natural increase rate of population

Source: SSC [2; 3].

The nationwide socio-economic progress, and the changes in the number of women of improvement of population’s social welfare and the reproductive age and the age structure, the number healthcare system development has had a positive of births per 1,000 population increased from 13.7 impact on birth rates leading to a gradual increase (2001) to 13.9 in 2003, and to 17.4 in 2015. This since 2003. Specifically, within this period, the rate went down to 16.5 persons due to a slight total fertility rate rose from 1.9 to 2.1 in 2015 decline in the number of births and a minor rise in (Table 4.1). In light of the abovementioned trends the number of deaths in 2016 [27].

Table 4.1. Fertility ratio (average number of births per one woman)

200 2005 2010 2011 2012 2013 2014 2015 2016 0 Total 2.0 2.3 2.3 2.4 2.3 2.2 2.2 2.1 2.0 Urban 1.6 2.1 2.1 2.2 2.2 2.1 2.0 2.0 1.9 Rural 2.2 2.5 2.5 2.6 2.5 2.3 2.4 2.2 2.2 Source: SSC [27]. Besides, an increase is observed in the number of related to sex-based selection during pregnancy male births in the sex ratio of live births (114 boys and is a matter of concern. to 100 girls in 2016 [27]). This is considered to be The fact that the number of deaths per 1,000

15 VOLUNTARY NATIONAL REVIEW - AZERBAIJAN population was averagely 2.8 times lower than the measures aimed at the country's sustainable socio- number of births and the downward trend in the economic growth, regional development, creation number of deaths (the number of deaths per 1,000 of vast opportunities for entrepreneurs and new population dropped from 6.2 to 5.9 between 2005 jobs, improvement of the social welfare of citizens and 2016) also had a positive impact on the and the well-being of the population as a whole, population increase. the net migration rate became positive in 2008 and According to 2016 data, the most common death thus equalled 1,100 persons in 2015. causes are the following: cardiovascular diseases – Macroeconomic situation. The Republic of 60.2%, neoplasms – 14.6%, digestive diseases – Azerbaijan regained its macroeconomic stability in 4.9%, injury, poisoning and certain other 1996 as a result of stabilization policy pursued consequences of external causes - 4.8%, since 1994 and its dynamic growth started in 1997. respiratory diseases – 3.2%. The goal-oriented policy carried out in subsequent The positive trends observed with respect to years with a view to further strengthen the decreased death rate of population led to an economic stability and revive the non-oil sector increase in the life expectancy at birth. along with the oil industry ensured the Specifically, this indicator, which was 71.1 years in sustainability of dynamic economic growth in the 1990 (male – 67.0, female 74.8), had risen to 71.8 country. According to the SSC data (Figure 4.3), (male – 68.6, female – 75.1) in 2000 and 75.2 real GDP of the country grew by 4.5 times in 2001- (male – 72.7, female – 77.6) in 2015. The figures 2014 and equalled 59.01 billion AZN while non-oil remained unchanged in 2016 except for a 0.1% GDP increased fourfold reaching 36.2 billion AZN. increase for males (72.8 years). Although nominal GDP decreased by 4.6 billion Recent years have seen a tendency to move from AZN in 2015 due to steep decline in oil prices in large families to medium families Specifically, global market, real GDP increased by 1.1 percent according to census data of 1999 and 2009, despite thanks to increased growth rate of non-oil industry. a 2.8% increase in the number of families Nominal GDP rose by 6.01 billion AZN in 2016 (households) with children under the age of 18, reaching 60.39 billion AZN while real GDP number of families (households) with 3 children decreased by 3.1 percent due to the above- dropped by 19.7%, and the number of families mentioned reason. The GDP dependence on oil (households) with 4 and more children dropped by sector started to fade away in 2008 and this process 40.8% by 2009 equalling 261,900 and 126,700 gained pace over the past 5 years. Specifically, respectively. During this period, there was a while the share of oil sector in GDP grew from significant decrease in the share of families with 3 29.9 percent to 56.1 percent in 2000-2007, it or more children (households). That is, the share of shrank to 30.3 percent in the period from 2008 to families with 3 children decreased from 25.5% to 2015. The 3.8 percent increase of this figure in 19.9%, while the share of families with 4 children 2016 (34.1 percent) can be attributed to some went down from 16.7% to 9.7%. growth in oil prices in the world market in the In early 1990s, the emigration intensity was quite same year. notable. But in subsequent years, as a result of

Figure 4.3. GDP production in 2000-2016 years (bln AZN)

Source: SSC [2: 3].

16 VOLUNTARY NATIONAL REVIEW - AZERBAIJAN Real GDP per capita increased by 3.8 percent in percent in 2015 compared to 2014, but rose by 9.8 2001-2014 to reach 6268.0 AZN (7990.8 USD) in percent in 2016 compared to 2015 to reach 6266.3 2014 (Figure 4.4). Due to the above-mentioned AZN. reason, nominal GDP per capita decreased by 8.96

Figure 4.4. GDP per capital (AZN)

7000.0 5966.1 6258.3 6268 6266.3 5752.9 5706.6 6000.0 4603.7 4753 5000.0 4033.2 4000.0 3296.6 3000.0 2208.2 2000.0 1494.3 872.7 1030.4 593.2 661.7 747.5 1000.0 0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: SSC [2].

In addition, the analysis shows that considerably inflationary measures in the Republic of Azer- large share of “Mineral fuel, oil and oil products” baijan” of the President of the Republic of Azerbai- in the commodity structure of exports of the jan, dated May 31, 2005, close relation between country (in average, 88.7 percent in 2000-2015, economic and social development indicators of the 87.0 percent in 2016) leads to high sensitivity of country and state budget expenditures was maintai- national economy to the fluctuations of global oil ned. The government also took necessary measures prices and consequently the changes in oil and gas to ensure that the budget is drawn up based on revenues. targeted programs. As a result, the inflation rate in The aforesaid shows that there is a need to stren- the country was attained at a managed level (single gthen efforts to increase the national production digit) during 2000-2015, except some deviation in and export volumes through the enhancement of the period of global financial crisis in 2007-2008, the non-oil sector’s production and export capacity, even at a range of 1-3 percent in some years. acceleration of diversification of export portfolio Inflation rate has increased to some extent due to and improvement of competitiveness in non-oil negative economic processes starting from 2015. sector. Specifically, the consumer price index increased by The government has taken a range of measures in 8.4 percent in 2016 compared to 2015 (Figure 4.5). recent years in order to minimize the adverse ef- In this regard, the task to improve macroeconomic fects of rapid economic development and growing stability became a priority and goal-oriented oil and gas revenues on the level of inflation. In actions are underway in this area. line with the decree “On strengthening of anti-

Figure 4.5. Consumer price index dynamics in comparison to the previous years, %

Source: SSC [2; 27].

17 VOLUNTARY NATIONAL REVIEW - AZERBAIJAN Investment and structural policy plays a can be concluded that greater focus should be laid significant role in the social and economic on the improvement of investment activity. development of the country. The analysis of data Development of entrepreneurship.The growth presented in Figure 4.2 shows that 212.5 billion of entrepreneurship is one of the key directions of USD was invested in national economy in the the social and economic development strategy of period of 2000-2015 with the purpose to improve the Government of Azerbaijan. Necessary legal the national economic potential and efficient use of framework, institutional and economic mecha- this potential. The shares of foreign and domestic nisms and market infrastructure facilities were investments in this figure were 47.7 percent and established in Azerbaijan following the restoration 52.3 percent, respectively. Compared to 2000, the of the state independence. These include laws and total amount invested in national economy in 2015 other legislative acts related to the growth of (2014) increased by 13.6 times (19.4 times) with entrepreneurship, as well as privatization of state foreign and domestic investments increasing by properties and state programs contributing to the 11.6 times (12.6 times) and 17.2 times (31.5 development of small and medium-size enterprises. times), respectively. Important measures related to the regulation of the Notably, the domestic investment capacity of the economy and entrepreneurial activities were country increased even more rapidly in the carried out based on these laws and programs. The reporting period. As a result, share of domestic government established relevant agencies to investments in total investments during 2000-2015 provide financial support and technical assistance (2000-2014) rose from 35.7 percent to 45.2 percent (consultation, information provision and other (58.1 percent). services) to entrepreneurship. In order to reduce the Meanwhile, it should be noted that the amount tax burden on entrepreneurs, profit and value- of total investments in national economy decreased added tax rates, and compulsory insurance by 30 percent in 2015 due to steep decline in oil premiums were reduced. The government also prices. The decline in foreign and local investments introduced simplified tax on small businesses was 8.4 percent and 45.5 percent, respectively. It based on their turnover.

Table 4.2. Investments to the country’s economy

Total investments Domestic investments Foreing investments Mln. US dollars % Mln. US dollars % Mln. US dollars % 2000 1441.4 100 514.4 35.7 927 64.3 2005 7118.5 100 2 225.3 31.3 4 893.2 68.7 2010 17591.4 100 9343.6 53.1 8 247.8 46.9 2014 27907.5 100 16209.8 58.1 11697.7 41.9 2015 19547.2 100 8828.1 45.2 10719.1 54.8 2000-2015 212542.2 100 111212.3 52.3 101329.9 47.7 Source: SSC [2; 27].

Some of the achievements in entrepreneurship social and economic development is based on the growth in the country are as follows: establishment of a new system of economic rela- - Ensured consistency in actions aimed at the tions. The said principles constitute the respon- development of entrepreneurship. The state prog- sibilities taken by the state with respect to the rams adopted for the development of entrepre- development of entrepreneurship and major as- neurship in the country ensured consistency in pects of the responsibilities of the businesses actions taken in the development of this field and before the society. These aspects include the state directed these actions to the implementation of guarantee to provide a social and economic common strategy. In addition, the protection and environment allowing the protection of private development of entrepreneurship was coordinated property and individual freedom to become within the state system. principal values, as well as the perception and - Major principles regulating the government- fulfilment of social and legal responsibilities of business relations identified. The growth of the businesses before the state. entrepreneurship based on major directions and - State-business relations institutionalized. principles of the public strategy on long-term Ensuring of sustainable development of the

18 VOLUNTARY NATIONAL REVIEW - AZERBAIJAN entrepreneurship in the country necessitated the Following the amendments to the Tax Code institutional organization of partnership between aimed at further modernizing the tax administra- the state and business. The mechanisms tion, the application of e-tax invoices started from developed in this regard (Azerbaijan Export and January 1, 2010. As a result of these actions, a Investment Promotion Foundation, Azerbaijan large entrepreneurial layer was established in all Investment Company, National Fund for fields of the national economy and the share of Entrepreneurship Support, Baku Business non-oil sector in GDP, tax revenues and employ- Training Center and National Confederation of ment in 2016 reached 83.7 percent, 72.8 percent Entrepreneurs (Employers) Organizations etc.) and 75.4 percent, respectively. [Ministry of Taxes]. are playing a significant role in the development The government continues its policy with the of state-business relations in an orderly manner. view to further strengthen and improve these As a result of measures taken, the policies and achievements and ensure the sustainable regulations governing the business activities in the development of entrepreneurship. Presidential country were liberalized considerably, the process decree “On strategic Road map for the manufacture of registering a business became simple thanks to of small and medium entrepreneurship-level the implementation of the “one stop shop” system, consumer goods” dated December 6, 2016, should business climate for entrepreneurs was improved be emphasized in this regard. This document significantly, the mechanism of governmental identified the key priorities for the short-term (up support to the entrepreneurship, including small to 2020), medium-term (up to 2025) and long-term and medium-sized enterprises was improved, (beyond 2025) development of small and medium- import and export procedures were simplified, size entrepreneurship. The following were set as export duties were eliminated and corporate tax strategic targets for the development of the SMEs rate was reduced to 20 percent and operational in the country: mechanisms of the protection of the rights of - further improve business climate and regulatory business owners were developed. framework in the country in order to increase The registration of businesses in Azerbaijan SME’s contribution to Azerbaijan's GDP in the under the “one stop shop” principle started in 2008. long run; Consequently, the number of procedures to start a - ensure efficient and cost-effective access to business was reduced from 13 to 2 for commercial financial resources in order to establish legal entities and the period necessary for such sustainable network of the SMEs; registration decreased from 53 days to 1 day. The - internationalize the SMEs’ activity and increase number of documents required for the registration access thereof to international markets in order to was reduced by 5 times. With the introduction of e- increase foreign exchange reserves and bring registration process for individual entrepreneurs in domestically produced products into line with July 2011, the time spent for registration was international standards; reduced from 2 days to a couple of minutes, - increase supply of high-quality products and ultimately leading to an increase of share of e- services in regional markets with special registration. “E-registration” system for for-profit emphasis on training of qualified labor force and legal entities was launched in February 2012, as a improvement of skills of the SMEs; continuation of these reforms. The system allowed - promote innovations to boost competitiveness of to reduce the number of days required for the the SMEs and strengthen research and registration of limited-liability companies with development in this field. local share interests from 3 days to one day in case The next activities to ensure the reconstruction of of simple e-registration, and up to a couple of national economy include acceleration of the minutes in case of rapid e-registration. development of entrepreneurship, strengthening of In 2010 the maximum threshold of income tax for its role in solving social and economic problems of individuals running businesses without establishing the country, adjustment of its operation to address a legal entity was reduced from 35 percent to 20 the development requirements of the national percent in order to even the tax burden between economy, expansion of coverage of state support legal entities and the individual entrepreneurs and measures in this regard and further improvement of stimulate the entrepreneurship. This common rate their target-oriented, as well as full and effective serves for the development of individual realization of existing capacity in the development entrepreneurs and protection of their interests. of regional entrepreneurship.

19 VOLUNTARY NATIONAL REVIEW - AZERBAIJAN Country ranking. Social and economic across borders” and “Recruiting”) starting from achievements of the country received positive 2007. assessment by respectable international organiza- Azerbaijan was ranked the 63rd in "Doing tions. Specifically, amid global financial and Business 2016" report where the achievements of economic turmoil that started in the second half of the country in “starting a business”, “dealing with 2008, “Standard & Poors” reviewed the ratings of construction permits” and “protecting minority some countries (Russia, Kazakhstan, China, Spain, investors” were praised. Greece and etc.) and Azerbaijan was the first According to the UNDP’s Human country to have a rating upgrade. In December Development Report, Azerbaijan moved up from 2008, “Standard & Poors” assigned “B” to short- medium human development group to high human term foreign and local currency sovereign credits development group in 2010. Human Development of Azerbaijan while long-term sovereign credit Reports 2015 and 2016 ranked Azerbaijan 78th rating was set at “BB+”. Economic outlook was among 188 countries and territories in Human changed from “stable” to “positive” in December Development Index (0,751 in 2014, 0,759 in 2015). 2009, and upgraded to “BBB-“in 2011. It has HDI of Azerbaijan has been above the average remained at this level since May 2015. Also, rating indicator of Europe and Central Asia (in 2015 HDI agency “Fitch” upgraded foreign and local value stood at 0,759 in Azerbaijan and 0,756 in currency sovereign credit rating for the country to Europe and Central Asia) [15]. “BBB-“ in May 2010. The agency assigned “F3” “Global Competitiveness Index 2016-2017” for short-term credits with “stable” economic report released by World Economic Forum outlook. The rating was maintained at this level ranked Azerbaijan 39th in macroeconomic during the assessments in 2011-2014. environment and 37th in “gross national savings as “Moody’s” rating agency assigned “Ba1” for a percentage of GDP”, 41st in “gross public debt as Azerbaijan in 2006-2011 with “stable” economic a percentage of GDP”, the 3rd in “number of outlook in 2006. The outlook was later changed to procedures to start a business”, the 9th in “number “positive” in 2007-2011. Later, the agency of days to start a business” and the 26th in “labor upgraded country’s long-term credit rating to market efficiency”. The country stood 37th among “Baa3” in 2012-2014 with “stable” outlook. 138 countries in the last report while it was only “BBB-“and “Baa3” ratings issued by these 64th among 138 countries in 2006. It is worth agencies is the indicator of rising trust of noting that Azerbaijan has retained its leading international financial institutions towards position among CIS countries for the past 7 years Azerbaijan. These ratings also facilitated the in the mentioned report. improvement of creditworthiness of the country, “Global Innovation Index 2016” report ranked necessary environment for the government and Azerbaijan 85th among 128 countries. The country large companies to issue securities to raise funds ranked 93rd in “human capital and research from international financial markets, reduction of capacity”, 123rd in “business sophistication” and interest rates and insurance premiums on 101st in “knowledge and technology output”. “Ease government-backed loans, subsequently easing of starting a business” (7), “microfinance gross access to international capital markets, rising loans as a percentage of GDP” (11), “investments” foreign direct investments, reducing the cost of (13), “domestic market development” (27), “GDP finance and improving country’s reputation at divided to unit of energy use” (29), “ICT and international scale. organizational model creation” (29) and “ease of “Doing Business 2015” report ranked protecting minority investors” (35) are some of the Azerbaijan 8th in the list of top 10 reformer country strengths identified by the report. countries. That is, the report particularly underlined the reforms carried out in “Registering property”, 4.2 POLICY MEASURES ON TRANSITION TO “starting a business” and “paying taxes” in 2013- SUSTAINABLE DEVELOPMENT MODEL 2014 and presented the country as a good example. The analysis shows that the sustainable “Doing business” report also named 19 reforms development model was launched in Azerbaijan in orderly realized in 9 fields (“starting a business”, the process of implementation of the MDGs. In “dealing with construction permits”, “registering particular, the State Program on Poverty Reduction property”, “getting credit”, “protecting investors”, and Economic Development (SPPRED) and the paying taxes”, “enforcing contracts”, “trading State Program on Poverty Reduction and

20 VOLUNTARY NATIONAL REVIEW - AZERBAIJAN Sustainable Development (SPPRSD), which have strengthen the social protection of low-income been adopted for the implementation of the MDGs, segments of the population. To provide are based on the sustainable development concept. employment for the country's able-bodied In order to ensure the fulfillment of the goals population, the "Employment Strategy of the stipulated by these programs, important reforms Republic of Azerbaijan" was adopted, along with have been conducted in the country, an appropriate two state programs (for 2007-2010 and 2011-2015) legislative framework has been developed, and a adopted for its implementation, and work has been number of strategies and state programs have been carried out on their basis to improve labor market adopted and carried out in varies fields. regulation, stimulate the demand for workforce, During the period under review, the laws of develop the human capital, provide employment Republic of Azerbaijan on "Minimum living for socially vulnerable population groups, and standards", "Targeted state social assistance", strengthen the social protection of jobseekers and "Social benefits" and "Labor pension", as well as unemployed persons. other regulatory documents were adopted to

During the period of implementation of the equipment (for 2003-2007); Program for the MDGs, three state programs (for 2004-2008, 2009- modernization of preschool education (for 2007- 2013 and 2014-2018) were adopted in the country 2010); State Program on the placement of children on social and economic development of the from state childcare institutions into foster families regions. Within the framework of these programs, (deinstitutionalization) and alternative care (for important work has been carried out in the areas 2006-2015); Program for providing secondary such as industrial and agricultural development, schools with information and communication improvement of electricity, heat and gas supply, technologies (for 2005-2007); State Program on the communications, water supply and sanitation informatization of the education system (for 2008- services, use of the environment and natural 2012); State Program for the development of resources, and construction and reconstruction of vocational education (2007-2012); State Program education, health, culture and sports facilities, for reforming the higher education system (2009- which are factors that propel the sustainable 2013); State Program on overseas education of development in the country. Azerbaijani youth for 2007-2015; State Program During the period under review, a number of state for the implementation of the National Strategy for programs, shown below, were adopted and the development of science (2009-2015); National implemented in the education sector in Azerbaijan: Strategy for the development of education; etc. Program on the construction of new secondary Along with the creation of a modern legal and schools, major repairs of the existing schools and normative framework for education in the country, providing them with modern educational a series of projects were implemented during this

21 VOLUNTARY NATIONAL REVIEW - AZERBAIJAN period with the aim of applying the basic principles The government of Azerbaijan takes meaningful arising from the Bologna Declaration in the field of steps on a regular basis to consolidate and further higher education, updating the education increase the achievements obtained in the process infrastructure, improving the provision of of implementing the MDGs on transition to a educational institutions with modern information, sustainable development model. In this context, the scientific and methodological support and adoption and implementation of the following textbooks, providing remote rural schools with the policy documents are of great importance: necessary pedagogical personnel, and modernizing - "Azerbaijan 2020: Look into the Future" the preschool and vocational education services. Development Concept. This document has been During the period under review, a number of prepared with the participation of experts and on laws and programs, shown below, were adopted the basis of broad public discussions and and implemented as priority areas of healthcare: approved under the Decree dated December 29, the laws of Azerbaijan Republic "On state care for 2012 of the President of Azerbaijan Republic. people with diabetes mellitus", "On medicines" and The following are the main priorities of the "On circulation of drugs, psychotropic substances "Azerbaijan 2020: Look into the Future" and their precursors"; the Action Programs for Development Concept: Formation of a highly 2011-2015 "On diabetes mellitus", "On competitive economy (formation of an tuberculosis control", "On treatment and economic model based on effective state prevention of thalassemia", "On hemophilia", etc.; regulation and mature market relations; the Strategy on combating non-infectious diseases improving the structure of the economy; in Azerbaijan Republic for 2015-2020, etc. As a development of the non-oil sector; supporting result of the reforms implemented in the field of scientific potential and innovation activities; healthcare, patients suffering from diabetes improvement of the transport, transit and mellitus, chronic renal failure, hereditary blood and logistics infrastructure; balanced development infectious diseases have been receiving free of regions); development of information and medicines and treatment at public expense in state- communication technologies and ensuring funded medical institutions since February 1, 2008. transition to the information society; Appropriate measures have been carried out in the development of human capital and country in the field of detection and prevention of establishment of an effective social protection HIV and treatment of HIV-infected people, and the system (protection of public health and Law "On combating disease caused by human improvement of the healthcare system; immunodeficiency virus" and the Action Programs formation of a modern education system; "On immunoprophylaxis of infectious diseases for improvement of the social protection system; 2011-2015" and "On combating HIV/AIDS for ensuring gender equality and family 2016-2020" have been adopted. Currently, there is development; development of youth potential a network of medical facilities equipped with and sports); improvement of legislation and modern equipment and combating HIV infection in strengthening the institutional capacity; the country, including the Republican AIDS development of civil society; protection and Control Center and antiretroviral therapy centers in effective management of cultural heritage; the cities and regions. environmental protection and ensuring Given the environment's impact on the health of environmental balance. the population and thus an indirect impact on their - A total of 12 strategic roadmaps for the welfare, necessary laws and policy documents have development of the national economy and its 11 been adopted and appropriate measures are being priority sectors (oil and gas industry (including undertaken in this direction. It deserves special chemical products); agricultural production and mention that there has been continuing forestation processing; consumer goods production at the across the country in this period, and forest level of SMEs; heavy industry and mechanical amelioration measures have been carried out. engineering; specialized tourism industry; During 2008-2015, reforestation measures were logistics and trade; provision of affordable carried out on 83 877 hectares of land, including housing; vocational education and training; forest planting and sowing works on 25 300 financial services; telecommunications and hectares of land, and about 53.2 million trees were information technologies, utilities (electricity planted. and heating energy, water and gas)) approved in

22 VOLUNTARY NATIONAL REVIEW - AZERBAIJAN accordance with the Decree dated December 06, IFAD, ILO, IOM, UNCTAD, UNDP, UNECE, 2016 of the President of Azerbaijan Republic UNESCO, UNEP, UNHCR, UNICEF, UNIDO, "On approval of strategic roadmaps for the WHO, UNFPA, UNODC, WHO, OHCHR, national economy and main economic sectors". Regional Centre in Istanbul [4]. The strategic roadmaps cover short, medium The priorities reflected in these documents appear and long-term periods and consist of the to be in line with the SGDs and the policies and development strategy and action plan for the other actions implemented in the country for the period until 2020, a long-term vision for the realization of these priorities lay the groundwork period until 2025 and a target vision for the for Azerbaijan Republic to be at the forefront of period beyond 2025. These documents cover not achieving these goals and to make a worthy only development goals and principles, but also contribution to the overall work of the world global trends in each area, 360-degree community. diagnostics of the economy and SWOT-analysis of the current situation, actions to be taken, 4.3 SUSTAINABLE DEVELOPMENT ISSUES IN required investment and result indicators. By LONG- TERM VISION OF COUNTRY’S focusing on the selected priorities in the short DEVELOPMENT PROSPECTS term, foundations will be laid for the medium As already mentioned in the previous sections, and long-term economic development. The Azerbaijan took a leading position in the world in Strategic Roadmap will provide all factors that terms of social and economic development rate in contribute to economic development, including the period 2000-2015. By virtue of the revenues opportunities for communication and obtained on the basis of the successfully cooperation with local and international private implemented oil strategy, the infrastructure has sector representatives. State investments will been modernized, foundations have been laid for play a catalytic role and the private sector will the development of the non-oil sector, social be the driving force of economic development. welfare has been improved, state-owned assets Besides, a number of cooperation documents have increased and strategic currency reserves have have been signed with international partners, in been created at a level comparable to the volume of which special attention is paid to sustainable GDP. Amid the weakening of economic growth in development issues. Signed in Baku on July 12, the country as a result of the sharp decline in oil 2016, the United Nations-Azerbaijan Partnership prices starting from 2014 and the economic crisis Framework (UNAPF) for 2016-2020 can be cited in the trade partner countries, institutional and as one of the most universal of these documents. In structural challenges, deficits in the balance of preparing the UNAPF, the national priorities payments and the non-oil budget and the processes specified in the "Azerbaijan 2020: Look into the taking place in the financial and banking sector, Future" Development Concept and the SDGs transition to a new economic development defined for the period beyond 2015 were taken into approach has become a necessity in Azerbaijan. account. The document specifies three interrelated Taking this need into account, a total of 12 strategic priority areas: i) promoting sustainable strategic roadmaps for the development of the and inclusive economic development underpinned national economy and 11 economic sectors were by increased diversification and decent work; ii) developed in accordance with Order No.1897, strengthening institutional capacities and effective dated March 16, 2016, of the President of public and social services; and iii) improving Azerbaijan Republic "On approval of the main environmental management and resilience to directions of the strategic roadmap for the national hazards and disasters. economy and main economic sectors and the issues Within these priorities, cross-cutting issues of a arising from it" and approved by the Decree dated human rights-based approach; gender equality; December 06, 2016 of the President of Azerbaijan youth; specific capacity development for Republic "On approval of strategic roadmaps for monitoring and evaluation (e.g., institutional, the national economy and main economic sectors". technical, managerial); and improving the overall Strategic roadmaps are policy documents stating evidence base will all be present. that the goals and objectives set in the strategies, The following agencies of the UN will also be programs and other policy documents adopted and involved in the implementation of the UNAPF in currently implemented in the country, including the accordance with their areas of activity: FAO, "Azerbaijan 2020: Look into the Future”

23 VOLUNTARY NATIONAL REVIEW - AZERBAIJAN Development Concept, should be implemented on Based on the foregoing, the main short-term, the basis of a qualitatively new development medium-term and long-term goals related to the model, by taking into account the developments on prospects of the national economy have been a global and regional scale in the modern age, defined as follows: global and regional challenges and their impact on Strategic vision for the period until 2020: to the country. achieve stabilization of the Azerbaijani economy in These documents emphasize that their aim is to the short term in order to help it out of the situation move towards a development model suitable for caused by the adverse effects of external shocks, to the post-oil era, which is based on the concept of accomplish diversification and restoration of the sustainable development in the country, in the development line by virtue of new drivers in the prospective period. Thus, the "Strategic roadmap medium term, and to increase competitiveness via for the prospects of the national economy of further integration into the world economy by the Azerbaijan Republic" provides that by focusing on end of the period. new "vanguard" sectors, which will ensure The strategic vision for the period until 2020 will sustainable development in the prospective period, serve to develop the foundations of the economy, the structure of the economy will be re-balanced which will be built for 2025 and beyond. Along via a more predominant growth of non-tradable with preserving Azerbaijan’s important role in sector than tradable sector, processing than Europe's energy security and development of production, private entrepreneurship than public transport and logistics corridors, it is envisaged to entrepreneurship, high-tech sectors than low-tech improve Azerbaijan's positions in the world sectors, industries based on high-skill labor than economy by increasing the competitiveness of its those based on low-skill labor, high-yield markets economy through diversification, progressive than low-yield markets and high value-added structural changes, reducing the dependence of the sectors than low value-added sectors. The renewal economy, the state budget and the exchange rate on of the structure of the national economy will be oil revenues and prices, and further expansion of possible through improvement of the business access to markets. In this context, along with the environment, introduction of a new policy within creation of new jobs, the focus will also be on the framework of the medium-term expenditure efforts to reduce poverty through improvement of strategy, rehabilitation of the financial and banking housing provision, development of the system system and improvement of the monetary policy supporting the provision of educational and health based on the floating exchange rate regime, as well services in line with the modern requirements, as expansion of access to foreign markets. improvement of utilities and ensuring transition Therefore, four strategic goals have been chosen from the targeted social assistance system to under the national economy prospects. The rehabilitation. implementation of these goals and the strategic Long-term vision for the period until 2025: to roadmaps for the 11 sectors will render sustainable achieve a strengthened competitiveness by adding economic development possible by ensuring a more value in the atmosphere of fruitful balance between real and finance sectors. In cooperation of all parties of the Azerbaijani accordance with the first strategic goal, Azerbaijan economy that has embarked on the path of will ensure fiscal sustainability and build its sustainable development. monetary policy upon the floating exchange rate During this period, it is envisaged to attract more regime. Coordination of fiscal and monetary investment into the national economy and enhance policies will ensure macroeconomic stability. The access to markets by developing the free second goal under the national economic prospects competition environment and supporting the is to improve the performance of the legal entities, private sector. In so doing, the development of the whose majority shareholder (stockholder) is the national economy will be ensured by taking into state, and to ensure economic dynamism through account the key trends in the global and regional implementation of privatization. The third goal is context, and integration into global and regional related to human capital development, whereby value chains will be taken as a basis. Protection of labor market development will be adjusted to the macroeconomic stability, improvement of business prospects of the national economy. Finally, the environment, promotion of private investments and fourth goal is to further improve the business a supportive public sector are considered to be the environment.

24 VOLUNTARY NATIONAL REVIEW - AZERBAIJAN fundamental basis for Azerbaijan's economic World Bank’s classification, expanding economic development prospects in the period until 2025. diversification, development of the non-oil sector, Target vision for the period beyond 2025: and increasing exports and foreign currency establishment of a strong, competitive and earnings), improving social welfare of the inclusive economy, which will ensure improved population (complete and targeted elimination of social welfare and the highest level of human poverty, expanding access to quality health and development index and will be based on high education services, ensuring food security, technological development and an optimal improvement of housing provision, increasing the structure of the economy. efficiency and service quality in electricity, water It is expected that a strong middle class, in-depth and sanitation, heating and gas supply sectors, specialization in areas with a competitive development of social dialogue and increasing advantage, effective integration with the world inclusive employment), and strengthening economy, ensuring national economic security and environmental protection (contributing to developed infrastructure will be the primary pillars environmentally cleaner air, water and soil by of the strategic vision for the period beyond 2025. reducing carbon emissions in the country, Besides, in accordance with the SDGs, Azerbaijan minimizing energy consumption for the production will remain committed to implementing urgent, of each GDP unit based on the principle of energy determined and transformative measures, which efficiency, increasing the share of renewable will make the world sustainable and strong. So, the energy in the energy balance of the country, and focus during this period will be on strengthening creating a system for the effective management of the economic capacity and ensuring the waste, including harmful gases, wastewater and sustainability of economic growth (enhancing radioactive waste). macroeconomic stability, as well as fiscal The above-mentioned shows that Azerbaijan sustainability, creating a favorable business attaches great importance to sustainable environment, development of the infrastructure, development issues in the long-term vision for the easing access to foreign markets, increasing development prospects of the country and resilience of the economy to external shocks and demonstrates an integrated approach to its improving labor productivity by enhancing the economic, social and environmental elements. In promotion of foreign investment, transition from addition, the development of an appropriate action the efficiency-based model to an innovation-based plan or national program is also on the agenda, in model, significant increase in real per capita order to closely coordinate policies and activities income of the population, acquisition of the status related to the SDGs and make a more efficient use of a “high income country” in accordance with the of available resources and opportunities.

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5. POLICY MEASURES AND across sectors by establishing a single approach. • Leaving no-one behind: This is expressed in FAVORABLE ENVIRONMENT various SDG goals/targets which aim at a univer- ESTABLISHED FOR ACHIEVING sal achievement (e.g. eradicate extreme poverty; eradicate hunger – zero targets; systematic use of SDGs disaggregated data; quality-outcomes based approach; and normative frameworks). This will 5.1. NATIONALIZATION OF THE require countries to work to reach the ‘last mile’. SUSTAINABLE DEVELOPMENT GOALS AND Countries will need to reevaluate their approa- THEIR INTEGRATION INTO THE NATIONAL ches, development interventions, and costs DEVELOPMENT AGENDA associated with reaching the last mile. As in all other countries, the activities for the This principle targets the identification of the implementation of the SDGs have started with the countries that are prone to the possibility of being nationalization related goals, and their integration left behind as per each of these targets and imple- into the country’s development agenda. At the mentation of measures to prevent these countries same time, the following main international from being left behind. Because of this Azerbaijan documents such as the UN’s Universal Declaration re-evaluates its approach, its measures for the of Human Rights, the “Agenda 21” adopted at Rio support of the development and its opportunities de Janeiro-92 conference, including “Main Princip- and resources for overcoming the distance in order les of a Sustainable Development”, Millennium to catch up with everybody and makes efforts to Declaration, “2030 Agenda” approved at the Sus- plan more efficiently for their use, taking into tainable Development Summit and other internatio- consideration vulnerable groups. nal documents in adoption process. In addition, the Generally, there is a great interest in the “2030 following key principles are set forth in the “2030 Agenda” as in the global development program and Agenda” for the implementation of the SDGs all stakeholders recognize the relevance of SDGs within the cooperative approach: for the country. All of the ministries and other state • Universality: The new agenda is applicable to bodies are ready to show support for the integration all country typologies, not only developing of the SDGs into their work and policies. As per countries. The concept of SDGs allows for the “leaving no one behind” principle vulnerable nationally adapted and differentiated approaches groups, including refugees and internally displaced for implementing what is seen as a common and persons, elderly people, people with disabilities, collective responsibility. children, youth related issues, gender equality and Based on this principle Azerbaijan keeps its focus other such issues are in the spotlight during the on the conformity of national goals and targets implementation process of SDGs. with the global goals and targets, along with the • Nationalization: To nationalize and to integrate national priorities, at the time of nationalization the SDGs, and the target and indicators determi- and inclusion of the global SDGs, targets and ned as per SDGs, into the country’s development indicators in the country’s development agenda. agenda the existing strategies, programs and other • Integrated approach: The new agenda denotes policy documents in force in the country are that it is clearly