In a context where global foreign investment increased by 10.9% in 2013, in particular in Europe (+25.2%) and in Latin America (+17.5%), FDI flows to developing economies reached a new high of US$759 billion. However macroeconomic fragility and policy uncertainties are driving investors to caution.
Foreign direct investments are very important in the Republic of Azerbaijan, especially in the energy sector. The flows of FDI (USD 563 million in 2010) reached over 2 billion USD in 2013. The shares of FDI in relation to the GDP are also increasing, exceeding the 20% threshold since 2009.
The country is part of the customs union between Russia, Kazakhstan and Belorussia, which in terms of volume is the most important in the region and is almost exclusively related to hydrocarbons, with major projects for oil and gas pipelines and related services.
The development of the FDI in 2014 will depend in particular on the economic health of its Russian partner, currently the dominant investor in Azerbaijan.
Information on the 2013 FDI influx in this region can be accessed in the Global Investment Trade Monitor published in January 2014 by the United Nations Conference on Trade and Development (UNCTAD).
|Azerbaijan||Eastern Europe & Central Asia||United States||Germany|
|Index of Transaction Transparency*||7.0||7.0||7.0||5.0|
|Index of Manager’s Responsibility**||5.0||5.0||9.0||5.0|
|Index of Shareholders’ Power***||6.0||9.0||5.0|
|Index of Investor Protection****||6.7||5.9||8.3||5.0|
Source: Doing Business - Last Available Data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.
|Foreign Direct Investment||2011||2012||2013|
|FDI Inward Flow (million USD)||1,465||2,005||2,632|
|FDI Stock (million USD)||9,113||11,118||13,750|
|Performance Index*, Ranking on 181 Economies||134||-||-|
|Potential Index**, Ranking on 177 Economies||83||-||-|
|Number of Greenfield Investments***||23||19||33|
|FDI Inwards (in % of GFCF****)||11.0||13.3||16.4|
|FDI Stock (in % of GDP)||13.8||16.2||18.7|
Source: UNCTAD - Last Available Data.
Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.
For more information, consult the report "Investment Climate 2011" on the US Department of State's website.
For more information, consult the website of the Agency for the Promotion of Investment in the Republic of Azerbaijan.
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Last Updates: October 2014