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Political and legal environment
The political risks of Azerbaijan are related primarily to the unresolved military conflict with Armenia. In particular, there are some disputed territories that these countries claim to possess, and this disagreement may result in a full-scale war. Additionally, one should speak about the growing discontent with the policies of the government, especially the unrestricted growth of the presidential power. In turn, this trend can lead to political turmoil.
The examples that have been provided indicate that the employees of various businesses can be exposed to the threats of physical violence. Admittedly, this risk is moderately high, but they should not be overlooked.
Foreign companies have only a limited opportunity for operating in the insurance market of this country. In particular, they can occupy only 30 percent of the total market share. This restriction creates significant challenges for foreign enterprises that want to operate in Azerbaijan.
At present, the ease of doing business in Azerbaijan is very low, especially in comparison with developed countries. As far as this criterion is concerned, the country occupies the eightieth place among 189 countries.
Currently, the level of corruption and bribery in this state is very high. Its rating is 29 on a 100-point scale.
The country’s trade is mostly based on the exportation of natural gas and oil, and Azerbaijan has a trade surplus. Additionally, political factors do not significantly undermine the economic activities of this country.
The government of Azerbaijan has adopted various international agreements that are supposed to protect the intellectual property rights of people and organizations. For example, one can speak about the Berne and Paris Conventions. Nevertheless, the norms included in these legislative acts are not properly enforced.
Economic environment
The GDP of the country equals $68.8 billion; in turn, the nominal income per capita is $10.000. Overall, Azerbaijan has been able to achieve considerable economic growth during the last decade. To some degree, this result can be attributed to the growing exportation of natural resources (Schmidt 140). Nevertheless, this growth slowed down during the last two years. This is one of the trends that should be considered.
In 2012, approximately 70 percent of people living in Azerbaijan were active users of the Internet. It should be mentioned that the rate of the Internet penetration has risen considerably during the last decade. Furthermore, the rate of mobile penetration is 107 percent, and it is relatively high in comparison with other developing countries.
This tendency is important for increasing the range of economic opportunities available to local people. Nevertheless, one should bear in mind that some Internet sites can be blocked by the government of the country. Certainly, these restrictions are driven by political motives, but such activities indicate that the government can control the use of the Internet.
Azerbaijan trades with countries that represent various regions. Among them, one can distinguish Italy, Thailand, Indonesia, Israel, Russia, and the United States since they are the largest trading partners. Overall, the government of the country attaches importance to the cooperation with Western countries (Schmidt 140). In turn, the trade with post-Soviet countries has decreased. This is one of the main details that should be considered.
The inflation rate in Azerbaijan is 1.1 percent; furthermore, the unemployment rate in this country constitutes 7.7 percent. Additionally, one should mention that the interest rate in this country is 3.1 percent. This rate is relatively low in comparison with other post-Soviet countries.
Works Cited
Schmidt, Sebastian. Potential Analysis for Further Nature Conservation in Azerbaijan: A Spatial and Political Investment Strategy, New York: Geozon Science Media, 2009. Print.
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