Transitional Economy of Azerbaijan Research Paper

Transitional Economy of Azerbaijan - Research Paper Example One of the transitional economic systems can be identified as the currently practiced structure of Azerbaijan which legitimately began with the execution of ‘Law on Basic Economic Development’ since the year 1991 followed by the commencement of ‘Cost of Liberalization’ in the preceding year 1992. This transition escorted to hyperinflation rates in Azerbaijan which was recorded to be approximately 1.66% by the end of the year 1994. Subsequently, since, 1991 to 1994, the national income of the country had to witness a steep decline from USD 35,006 million (in 1991) to USD 1.031 million (in 1994). The radical decline in the growth rates was further learned to have a crucial effect on the agricultural and industrial output of the country which consequently increased the rate of unemployment within the economy (Baranick & Salayeva, 2005).   The economy of Azerbaijan The economy of Azerbaijan was able to retain its growth since the year 1995 after witnessing a s ubstantial decline in terms of its income level as well as its overall industrial output. The reforms in the economic conditions have taken place in the year 1995 when the government attempted to set up a widespread stabilization approach in its economic system with the support of International Monetary Fund (IMF) with respect to its Systematic Transformation Facility (STF). The increasing growth of the economy was immensely supported by the country’s persistence towards the stabilization of policies within the private and governmental institutions. As well as the IMF, The World Bank, the Asian Development Bank (ADB), and the European Bank for Reconstruction and Development (EBRD) have been identified as a few of the major prominent financial contributors in the developmental process of the economic conditions in Azerbaijan. With regards to the forecasting view of IMF towards the development of the country, it had been projected that Azerbaijan is quite likely to attain a sus tainable growth rate of around 7.1% by the year-end of 2012. It was also assumed by IMF that the inflation rate, likely to be witnessed by the country in its progress during 2012, would be around 10.3% (Mirzeyev, 2012).