The Fastest-Growing Economies Among the Oil- and Gas-Producing Countries

As noted above, the other fastest-growing economies for 2000 to 2014 can be divided between those whose accelerated growth was largely based on investment in energy (oil and natural gas production) and on related export revenues and those that based their growth on accelerated integration into global financial and trade flows and not primarily the energy sector.

Azerbaijan

In the first fourteen years of this century, Azerbaijan was the fastest- growing economy in the world. It succeeded in improving its relative economic position (Cg) by 212%. Looked at in terms of five-year periods, Azerbaijan achieved its greatest rate of growth and percentage boost in the Cg between 2000 and 2005 (an increase of 66.6%) and 2005 to 2009 (an increase of 81.8%). In 2009-2014, its relative economic standing improved by just a further 3%. Overall from 1990 to 2014 its Cg rose 42.1%, placing it 38th in the world in terms of rates of relative economic growth. This was at least partly due to the fact that the Azerbaijani economy’s absolute and relative decline during 1990-2000 had placed it amongst the ten countries with the largest fall in relative economic standing during that period.

Azerbaijan’s main export is oil. Its rising price was the most important variable underlying the high rates of GDP per capita growth during 2001-2010. The degree of financial liberalization and of financial globalization attained were not leading factors in its economic growth or its changing economic standing. The normalized values for the Chinn-Ito index ranged from 16.39 to a peak of 57.1.²² During the periods of most impressive growth (2000-2005 and 2005-2009), a greater degree of de jure financial openness in 2002-2003 was followed by repression in 2004-2006, only to grow again over the following three years, which corresponded with accelerated economic growth. Even when de jure financial openness was growing (2007-2008), however, the main additional stimulus to growth came from changing oil prices on international markets, up on US markets from approximately US$75 per barrel in mid July 2007 to approximately US$147 per barrel a year later.

The government of Azerbaijan founded the State Oil Fund (SOFAZ - in 1999) and also owns the State Oil Company (SOCAR). According to WTO data, oil and gas sales account for 94.2% of all exports.²³ Taking place as it did during the first fourteen years of this century and after a major decline in the last decade of the twentieth century, Azerbaijan’s economic growth was almost entirely related to investment projects in the energy sector, including the development of infrastructure to support the sector. Given that Azerbaijan does not publish an International Investment Position, we may use the data on net FDI from the World Bank database as a measure of de facto financial openness. According to this source, total net FDI inflows to Azerbaijan were US$12.94 billion between 2001 and 2005, US$19.32 billion between 2006 and 2010, and US$16.83 billion between 2011 and 2014.²⁴ According to UNCTAD data, the total FDI stock to GDP ratio was 16.2% in 2012 and 24.5% in 2014.²⁵ The country’s external debt increased from US$1.52 billion in 2000 to US$11.69 billion in 2014 (669%). Nominal GDP was up from US$5.27 billion to US$75.2 billion (by 1,327%). These trends led to Azerbaijan abating its external debt to GDP ratio from 28.9% in 2000 to 15.5% in 2014. Between 2009 and 2014, external debt nonetheless increased by a factor of 2.5, while nominal GDP increased by a factor of only 1.7. Export revenues fell 3% during 2013 and were down 11% in 2014, as a result of the sharp fall in the price of its major export products. This country’s financial opening-up has been gradual and, according to available data, the most important foreign investor has been the Russian Federation.