Analysis of the de-dollarization problem in developing countries on the example of Azerbaijan in the conditions of geopolitical asymmetry

Abstract

The object of research is the asymmetry of interests in geopolitics between developed and developing countries. In the context of the global crisis, the issue of de-dollarization is relevant from the political and economic point of view. What will be the behavior of small oil countries in this situation is a big problem. Also for them the question remains: how to get off the oil needle in the most painless way? The method used in the study is analysis of the current situation not only from the macroeconomic, but also from the political point of view. Also, the ways of solving the above-mentioned problem by other states are examined in detail, and comparative analysis is conducted in the case of applying these methods to Azerbaijan. Recently there was a favorable situation on the world market for raw materials. Thanks to the global economic crisis, the «resource blessing» has turned into «resource damnation». This theory points to the interrelation between large revenues from the natural resources’ export and the weak economic development of the country, and reflects the suppression of market development and the decline of other economic sectors’ competitiveness, the increase of the national currency, inflation and unemployment. It is difficult to overestimate the role of oil in the economy of Azerbaijan. In Azerbaijan smaller proportion of employed in the industry gives more of GDP, reflecting the predominantly mineral-raw material orientation. The population is the main supplier of resources to the stock market world over. But for Azerbaijan, there no chance on successful development of this economic sector yet. In current conditions, Azerbaijan should treat the idea of de-dollarization more restrainedly. Today, especially during the currency crisis, it is economically unprofitable, not to mention the fact that Azerbaijani raw materials exporters need dollars and Euros to pay off their foreign debts and make purchases on imports to support the extraction of raw materials. The transition to manat, if it takes place, will sharply worsen the competitive position of Azerbaijan in the energy markets. Costs will increase significantly for importers, since they need to buy manat for dollars or Euros, to lose on the difference between the rates of buying and selling. In addition, they would have to spend money on insurance against risks of depreciating manat, and this would also be worth a lot, because manat is a currency, which rate is subject to very high fluctuations. The acquisition of fuel is often done at the expense of a loan. There is a very high percentage of manat loans. Here is one more extra cost for those who would have to buy Azerbaijani fuel for manat. When we force customers to pay extra, we lose them.