In look on our imports. Machinery, boilers, articles

In 2015, Azerbaijan economy fluctuated widely.

The main reason was that manat lost its value against dollar consequently. If we look at the 2015 exchange rates, manat was exchanged to dollar in 0.78 rate. Talking about today, if you want to buy 1 dollar, it will cost you about 1.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!

order now

70 Azerbaijan Manat. It just shows how direful things get changed throughout these years erratically. Of course, it has impacts in many ranges overwhelmingly. The Enterpreneurship is just one of many. Concerning, what does exactly influence it and in which direction it has changed its trajectory, we will talk about it more and broadly in the body part. What motivates a person to start a new business? According to classical models, entrepreneurs initiate new businesses as a consequence to unmet needs and demands in the market.

That is, there is an opportunity to provide a service or output that is not currently in existence, or contrarily available. Economists refer to these business-starters as “opportunity” entrepreneurs in order to differentiate these individuals from those who start businesses for lack of better work hope. So-called “opportunity” entrepreneurs, who launch new enterprises in response to market needs, are key players when it comes to boosting economic growth in a country. They enable access to services and goods that community requires in order to be dynamic.

Hence, this is not to avoid “necessity” entrepreneurs that launch enterprises because they have no other choice. Both can and do assist to economic expansion. If we look at the situation here in Azerbaijan, we mostly focus on exporting crude petroleum – approximately 87% of all exports (2016 data). It apparently shows how we depend on Oil & Mineral Fuels and the improvement in one direction. Let`s take a closer look on our imports.

Machinery, boilers, articles of iron or steel, electronic equipment, cereals, tobacco and manufactures tobacco substitutes, pharmaceutical products, optical, photo, technical, medical apparatus, wood and articles of wood, wood charcoal, plastics, lighting signs, prefabricated buildings, sugars and sugar confectionery, sopper, inorganic chemicals, precious metal compound, isotope, plaster, cement, asbestos, mica or similar materials, miscellaneous chemical products, soaps, lubricants, waxes, candles, modelling pastes are just some of it. So, it shows how big gaps exist in our economy that we import these goods. Literally, it is an opportunity to start a business and beat the imports back, simultaneously meet the basic needs of people here. On the other hand, it will cost less to populace and gather high amount of customers easily. Since, imports have lots of taarifs, transportation costs that added up on it, local products don`t have such problems. So it should be huge encouragement,inspiration or optimism for enterpreneurs. International relations trigger small, entrepreneur-led businesses to spread into regional and global markets continuously.

Firstly, it makes the entrepreneurs less worry about consumers, because when you go out of the borders, you get more costumers interested in the goods rather than just in the home country as a consequence of increasing scope. Being talked about our international relations, we have great alliances all over the world and it makes much easier for us to find a market to handle their production, goods or if we emphasize overall – their brand. Another point is the country itself. The government buy it itself from the sellers and take the goods to world markets in these current years, so the transaction and other related costs disappear for entrepreneurs. Azerbaijan do have the storages, as well which keep the goods harmless for a long period and whenever the producer, executive wants, he/she is welcome to take it to a bazaar in suitable time. Additionally, entrepreneurs do need secure property rights, the rule of law. Maintaining a decent legal system with legitimate property rights and contract law, and an orderly bankruptcy system that reassures lenders and enables failed entrepreneurs to get back on their feet. If we take a look at our property rights and the legacy, which shows how it is strong and appropriate for an enterpreneur explicitly.

If we compare the situation against Latin Amercia, Africa, South Asia contries etc., we can easily notice that our government does everything in itself to stimulate enterpreneurship via secure supervision and protection on the properties which prevents from any kind of adverse violation by anyone or anything absolutely. So, it makes high self-confidence and assurance for entrepreneurs additionally. According to Prof. David Birch of MIT, his findings from researchs were that job creation was not coming from large companies, but small independently owned businesses. It recommended that a policy of governments should target indirect rather than direct strategies with a greater focus on the role of small firms, reform immigration and open borders. For instance, immigrants constitute nearly two third of all new businesses in the U.S.

, more than twice the amount created by the overall population. The same is applicable to us as well. So, which factors can stimulate foreign direct investment to Azerbaijan in the ongoing capricious situation? Wage rates A crucial enticement for a multinational to invest abroad is to outsource labour intensive production to countries with lower wages. If average wages in the US are $17 per hour, it is just 2$ for Azerbaijan, costs can be reduced by outsourcing production.

Tax rates Major multinationals, such as Microsoft, Google and Apple have sought to invest in countries with lower corporation tax rates. For example, Ireland has been outstanding in alluring investment from Google and Microsoft. In fact, it is the same for small entreprenurs as well. Investing or having businness by locals in countries like France, Japan, Mexico etc. which has the corporate tax rate above 30%, is not appropriate for a small enterpreneur, which will result with little amount of income at the end to him. Applying the same to Azerbaijan, it is just 20% here, which is even twice less than some countries. Transport and infrastructure One of the essential factors in the desirability of investment is the transport costs and level of infrastructure. A country may have minor labour costs, but if there is then soaring transport costs to get the goods onto the world market, this is a huge drawback.

Countries with sea access are at an advantage to landlocked countries, who will have huge costs to ship goods. Focusing exactly on Azerbaijan, here both the labor cost is low, transportation, infrastucture is much better than other competitive countries and we have the access to the sea, so it is another source of stimulation to foreigners to start their entrepreneurship here. Political stability / property rights Foreign direct investment has a particle of risk. Countries with an uncertain political situation, economic crisis, will be a major disincentive and discourage to enterpreneurs.

For example, the recent Russian economic crisis, combined with economic sanctions, will be a trouble to attrack foreign investment. Related to political stability is the level of trust in institutions, principally judiciary and the extent of law and order. As we mentioned above, Azerbaijan is highly secure and safe place and all property rights is reserved by the government itself. That is a neat argument which attracts the entrepreneurs and flourish the business non-stop. Exchange rate A weak exchange rate in the host country certainly will captivate more FDI because it will be cheaper for the multinational to purchase assets. So, an investor can just buy a few things in Europe because of strong euro rather than Azerbaijan. So, it both attract tourists and the investors.

More tourists means more stimulation for entrepreneurs to begin the business like pubs, lounges, cafes, hotels etc. Imports become more expensive, any imported good or raw material will increase in price, likewise reduces the purchasing power of citizens. So, it forcefully stimulates entrepreneurs to produce, yield inside the borders rather than buy it internationally, cheap goods which is caused by weak exchange rates, deliver more and more investors, buyers in itself.

All these aren`t just factors of foreign investment, it is applicable to incentives of locals. How it worth to foreigners, the same volume it is valuable aspects to host country entrepreneurs as well absolutely. On the other hansd, we often encounter those people whose startups go out of business quickly just after being started.

Entrepreneurial activities tend to deliver unfavorable results before having positive results. Only very few businesses expand and attain success in a visible manner within the first several years. Correspondingly, it is rare that a project to revive the local economy and gets on the right track from the kick off. There would be many trials and errors in the previous stage of such an initiative, and striking success often comes after a series of endeavor. So it would be much better if there are improved and simplified insurance system which will help the entrepreneurs against any failure. It will encourage entrepreneurs to start a business and they will not be scared because of secure insurance. Another issue is education, training.

It would be exceptional if we have some consultation agencies that enlighten entrepreneurs to find a right track, to distribute their budget carefully. These problems hav been seen by government officials and now we have an agency which is called National Fund for Entrepreneurship Support. It connects both problem – insurance and consultation perceptibly and solves these just from the begginning. It finances investment proposals of the entrepreneurs with concessional credits which wipes out the problems in the utilization of concessionary credits granted from the state budget, coinciding the activity of the National Fund for Entrepreneurship Support with the burdens to be solved on the priorities and steps of expanding of Azerbaijan economy, strengthening of state cooperation on the entrepreneurship and spreading out this activity. Application of these procedures played a remarkably important role in stimulating all enterpreneurs by means of provision of concessionary credits. In compliance with the procedures, the proceeds of the National Fund for Entrepreneurship Support are placed to entrepreneurs with the lowest interest (annually 7%, and annually 5% for the programs directed to enlarging of mass media), also installation of the concessional term of the first two parts of credit periods and lower credit interests resulted with an exceptional interest to these projects by enterpreneurs.

Thus, we have mentioned several sources which fuel the incentives to become an entrepreneur. If a nation wants to succeed, make high economic growth and has its fate on his hands, then it should create chances itself. The chain is intuitive: entrepreneurs constitute businesses and new businesses constitute jobs, extend market competition and increase fertility. These economic opportunities help and uplift communities by means of raising the quality of life and overall standard of living. Entrepreneurism shows an access to upward mobility – a route for average people to accumulate wealth.


I'm Casey!

Would you like to get a custom essay? How about receiving a customized one?

Check it out