The Reality and Prospects of Economic Development of the South
Caucasus Region: New Approaches to the Influence of Internal and
External Economic Factors
IRSHAD KARIMLI1, REYHAN AZIZOVA1, RAMAL KARIMOV2,
ILKIN BAYRAMOV2 , ABDULLA JASIM AL SHAMSI3 ,
1Azerbaijan State University of Economics (UNEC),
AZERBAIJAN
2Baku Business University (BBU),
AZERBAIJAN
3United Arab Emirates University,
UNITED ARAB EMIRATES
Abstract: - In general, the most favorable position in the Caucasus in terms of territory belongs to the South
Caucasus. It is necessary not only to analyze but also to generalize the geoeconomic realities of the South
Caucasus region, which increase its importance and affect the system of international economic relations.
First of all, it should be noted that the location of water bodies such as the Caspian and Black Seas, surrounded
by countries such as Russia, Iran, and Turkey, has turned the South Caucasus region into an East-West and
North-South corridor. These factors show that the Caucasus, especially the South Caucasus, occupies an
important position in the geo-economic region of the world. In recent years, it is clear that international
organizations and the world's economic powers attach great importance to the region. It is no coincidence that
the South Caucasus and Central Asia have led to sustainable development and security from the Mediterranean
to China, as well as sustainable development and the export of Caspian oil and gas with the participation of
world-renowned companies to the European market.
Key-Words: - South Caucasus, geoeconomic, Trans-Caspian route, Zangezur corridor, European market, Asian
market, internal and external economic factors.
Received: June 9, 2022. Revised: September 13, 2023. Accepted: October 16, 2023. Available online: November 22, 2023.
1 Introduction
Currently, the development model of our country is
adapting to the development trends of advanced
countries. At the same time, the development of
science and technology, the formation of an
advanced innovation system on theoretical,
methodological and applied scientific bases is
included in the strategic goals of state policy, [1].
The main task facing Azerbaijan today is not to
lag behind the development process of the world, to
increase the efficiency and competitiveness of the
economy and to ensure its innovation-based
progress.
This means the formation of a new economic
model, changes in the education system, the
development of science, [2].
There are real opportunities for Azerbaijan to
make such high claims and take confident steps
towards the strategic goal. In order to achieve the
important goals ahead, first of all, along with
reducing dependence on natural resources and
developing the non-oil sector, it is planned to
increase the focus on science-intensive production
and innovation. There are many power centers with
a direct interest in the South Caucasus region. Not
only Russia, Turkey, and Iran, but also the United
States and France are showing great interest.
Official Moscow and Ankara are trying to
implement a strategy of a special approach to the
countries of the region in preparing the contours of
regional policy. Such a special approach strategy
ultimately determines the behavior of Azerbaijan,
Georgia, and Armenia with Russia, Turkey, Iran,
and the United States at different levels and statuses.
There are many power centers with a direct
interest in the South Caucasus region.
Recent realities are such that the share of those in
Armenia demanding the abandonment of a foreign
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policy course that favors strategic relations with
Russia is growing. According to many experts, the
growing development of Russian-Azerbaijani
relations in recent years, especially the rapid
expansion of military cooperation, has caused
serious concern in Armenia, [3].
Along with many countries close to the South
Caucasus, authoritative research centers far abroad
have more or less clarified the potential strategic
line of each of the powerful neighboring countries
interested in using the nature and economic
potential of the South Caucasus.
Thus, according to the program of economic
research of the Caspian and Caspian countries at
Harvard University, each of the three countries in
the South Caucasus has an incomprehensible
relationship with its "foreign" neighbor. For both
Russia and Turkey, as well as the United States,
Georgia, and Azerbaijan are countries that attract
attention in terms of geostrategic coordinates.
If we take into account that Azerbaijan, as an oil
and gas producer, is valuable for the Western region
from a geostrategic point of view, then Georgia is
very valuable for the transit country and territory in
terms of oil and gas transportation.
The strange reality is that in the South Caucasus, as
in the rest of the world, in very valuable and
strategically important areas, the waves of
separatism are often intensified by internal and
external factors, with unexpected bitter
consequences.
It is no coincidence that the territory of Georgia, like
the territory of Azerbaijan, suffers from these bitter
consequences.
The analysis allows us to conclude that only two
of the three countries of the South Caucasus,
Azerbaijan and Georgia, are affected by both
domestic and foreign economic factors due to their
very valuable territory - a region of geostrategic
importance. The study of internal and external
economic factors in the economy of the South
Caucasus region and its economic development
plays a key role in identifying the factors that shape
them, distinguishing the most decisive factors, and
studying them.
In any case, since there are many factors of
economic development in the region, it is necessary
to study the factors that directly affect economic
development, especially those that affect the growth
of real production in the region, improving its
structure, efficiency, and profitability.
These factors determine the dynamics and level
of regional economic development, have a direct
impact on the growth of real production on a large
scale, and play an important role in increasing its
profitability.
Although modern economists use the methods of
methodological approaches to the study of economic
development in the regions of the world at almost
similar levels, in any case, their final scientific and
practical results differ from each other.
The different conclusion is that regional
economic development factors need to be
considered as components of a single system, as
they are studied separately as economic and non-
economic, direct and indirect, intensive and
extensively managed and unmanaged processes
(Table 1).
Table 1. Grouping of economic development factors
of the South Caucasus region
№
Major
groups of
factors
Half factors of each major
group
1.
Natural
objective
factors
a) Geological resources: all
types of natural resources in the
region and forecasted
b)Industrial resources: natural
resources known to be extracted in
the region
c) Geographical location: the
region's access to the ocean,
proximity to shopping centers
2.
Economic
factors
a) Investment opportunities:
Location of capital in the countries
of the region
b) Investment attractiveness
c) Human capital
d) Innovation potential: the
number of scientific centers and
scientists in the countries of the
region, commissioned scientific
discoveries,
3.
Institutional
factors
a) the pace of economic
reforms in individual countries in
the region and the frequency of
changes in laws
b) the existence of democratic
institutions in the countries of the
region, the formation of civil
society, the level of protection of
property
Note: The table was compiled by the author based on
available statistical materials.
Source: author’s work.
There are studies by economists on the economic
development of individual regions of the world and
their impact on international economic development
as a whole, [4].
They focused not only on the principles of
structuring individual countries, but also on the
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regional economy, the openness of the economy,
and the grouping of demographic and environmental
factors.
Being a region that attracts the world's attention,
the South Caucasus region needs to be studied by
grouping the internal and external factors that affect
its economic development not only by functional
features but also by sectoral and sectoral features,
[4].
In recent years, researchers not only from
Western and Asian countries but also from many
Arab countries have written works devoted to the
study of the economic potential of the South
Caucasus, assessing the current state of foreign
economic relations of individual countries in the
region.
They focused on the importance of attracting the
natural resources of the South Caucasus to
international economic circulation and the role of
international transport corridors in this direction,
and more on the causes and consequences of the
growing interest of foreign investors in the region.
In terms of specificity, it should be taken into
account that more attention should be paid to the
grouping of natural and economic factors under the
influence of a group of factors in the economic
development of the South Caucasus region, [4].
This is because the connection of these factors
with other regions in the South Caucasus is
noteworthy not only by field features but also by
functional features (Table 1). is of particular
importance. In this sense, by specifying the factors
of economic development of the South Caucasus
region, they can be grouped as shown in Table 1.
Although the grouping of the main factors of
economic development of the South Caucasus
region according to the features shown in Table 1
may seem like a conceptual approach, it can still
reflect the economic reality.
These factors, which play a decisive role in the
economic development of the region and the impact
of this development on international economic
development as a whole, are grouped according to
their specific features.
Structural and diversification processes come to
the fore in this direction, and it is necessary to
assess how these processes work in the region as a
whole and in the individual countries of the region.
2 Methodology
The rapidity or slowness of structural change and
diversification in the economy of the South
Caucasus can be seen in the dynamics of
specialization of production in the region in general,
and in particular in individual countries in the
region.
In any case, they have a direct impact on the
growth of real gross domestic product (GDP) in the
region, and play an important role in improving the
efficiency of specific specialized industries.
In the assessment process, production, market,
distribution, demographics, etc., which are more
characteristic of regional development in the
economy of the South Caucasus, are considered.
It would be correct to draw conclusions by
calculating the economic indicators formed under
the influence of such factors.
Although the factors of economic development
of the region related to production are mainly
related to the physical volume of production, and its
current state, the factors related to the market of the
region are mostly related to factors such as supply,
demand, competition, price, quality.
We must take into account that the group of
factors related to production in the South Caucasus
region may include factors such as the degree of
monopoly in the economy, the provision of
production resources, taxation, and lending.
Although the first group of factors constitutes the
expansion and material basis of production in the
region, the second group of factors shows how
production results, its ultimate goal, and efficiency.
In this sense, while the first group of factors
shows the prospects for economic growth in the
region, the second group of factors shows the short-
term dynamics of real GDP in the region and at the
same time is affected by the market.
Both of these groups of factors make it possible
to ensure sustainable economic development by
stating the main directions of economic policy in the
South Caucasus.
In this sense, the efficient use of the region's
natural resources to increase production capacity in
the region attracts more attention. It should be borne
in mind that if the region's natural and economic
resources are fully and efficiently used, the real
GDP of the region can reach its maximum, which
can achieve the potential of the factors necessary for
GDP production.
In any case, the grouping of the main factors of
economic development of the South Caucasus
region by common features is conditional. However,
many studies classify the factors of economic
development not only of individual countries in the
South Caucasus but also of the region as a whole
based on internal (endogenous) and external
(exogenous) factors.
In general, internal and external factors have a
strong influence on economic development in the
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South Caucasus region when they interact with each
other.
The deepening and expansion of modern
globalization processes lay the foundation for the
transformation of the region into internal
development factors for regional economic
development and to increase the impact of this
development on international economic
development.
It should be taken into account that the existence of
foreign economic development factors has been
active.
Table 2. Grouping of economic development factors
of the South Caucasus region by functional
characteristics
Note: The grouping here is made by the authors based on
available data.
Source: author’s work.
For a more detailed analysis of this situation, the
economic development of the South Caucasus can
be grouped in the following sequence (Table 2).
Fig. 1: Economic development factors of the region.
Source: [5]
Fig. 2: Factors of economic development of the
region.
Source: [5]
As can be seen from Figure 1 and Figure 2,
natural and economic resources, foreign investment
and trade have a special place among the main
factors influencing the economic development of the
South Caucasus region, [5].
Changes and innovations in any region of the
world, both in natural and economic resources, as
well as in scientific, technical, and socio-economic
spheres, are the main providers of economic
development of areas and infrastructures that are
important for the region, [5].
At the same time, internal factors of economic
development play a special role in increasing the
efficiency of the economy of the region and the
countries representing the region, infrastructure
development, liberalization of economic activity,
the level of economic reforms, use of digital
technologies and so on.
A comparative analysis of the indicators in
Figure 2 shows that the availability of natural
resources has a special role and importance among
Factors Group
Symptoms
Factors of
production
1. Volume and composition of natural
resources
2. Volume and structure of economic
resources
3. Fixed capital: Availability of physical
capital consisting of machinery,
equipment, buildings and facilities
4. Technology in production, the level of
ETT
5. The cost of factors of production
6. Opportunity to get a loan
Market factor
1. Expansion of exports, demand,
supply, investment, price, and
competition
Distribution factor
1. Distribution of production resources
between the countries of the region
Other factors
1. National ethnic, moral environment,
and political situation in the region
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the internal factors of economic development of the
South Caucasus.
First of all, the region's natural resources make
the world's weakest economy attractive for
investment, regardless of the region and the level of
economic development of the countries located in it.
Second, natural resources are a major source of
funding for the region's economic development.
Due to this source, the increase of economic
resources, which is a crucial direction for modern
international development, is enriching the
economic potential of the region, especially through
the creation of human capital, [5].
Because human capital can influence
international economic development as a whole,
forming the basis not only for the creation of
economic wealth of individual countries in the
region but also for the region as a whole.
Recent research by the World Bank has shown
that in industrialized countries, human capital is the
main source of not only the creation of economic
wealth but also its increase.
According to their calculations, in the
industrialized countries of Western Europe, fixed
assets account for 23% of economic wealth, natural
resources for 2%, and human capital for 74%.
These figures are stronger in the US economy, at
19.0%, 5.0% and 76.0% respectively. It is also a fact
that human capital can be formed only in connection
with education, the cost of education, [6].
It is no coincidence that the reality of
development in industrialized countries confirms
that $ 1 spent on education will bring about $ 6 in
the coming years, and even 1 year of additional
education can increase production by 5-6%, [6].
Although this development trend is not typical
for the countries of the South Caucasus, in any case,
for the rapid development of the region in the future,
the amount of funds allocated by the public and
private sectors for the formation of human capital
should be increased.
This direction can lead to a gradual increase in
labor productivity in the region, thereby increasing
the quantity and quality of gross domestic product
(GDP), as well as GDP per capita.
Modern times, as in the world as a whole, as a
result of the expansion of globalization processes in
every region of the world, the strengthening of
interregional production and economic relations,
bring to the fore exogenous (external) factors of
economic development in the world and intensify
these factors.
In this sense, it is necessary to pay more attention
to the role and importance of external economic
factors in assessing the economic development of
the South Caucasus and the impact of this
development on international economic
development as a whole. For the reality of such an
assessment, there is a need to group external
economic factors in more specific directions, which
makes it necessary to group in the following
sequence how data are shown in Figure 3.
Fig. 3: Grouping of economic development factors
of the South Caucasus region.
Source: [5]
As in other regions of the world, economic
development in the South Caucasus brings to the
fore exogenous (external) factors related to the
expansion of production and economic relations
between the countries, the acceleration of regional
and more international economic integration
processes.
Although this is due to the globalization of the
world economy, in any case, the acceleration of the
liberalization of international trade also has an
impact.
We must take into account that the financial and
economic crisis in any region of the world can affect
the South Caucasus region, as well as other regions.
In this sense, in our opinion, the general principles
of international economic development should be
studied regularly, paying more attention to external
factors, and foreign economic factors should be
systematically studied. In our opinion, first of all,
the South Caucasus countries should pay more
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attention to international investment, the process of
deepening the international division of labor, world
exports, and imports, the problem of international
debt, the principles of international competitiveness,
and international business.
International economic relations, including in the
regions that attach special importance to
international trade, often use the terms "export-
oriented" and "export-oriented production" in the
economic literature of recent years when assessing
the economy of the South Caucasus. In this regard,
the issues of "national economy", and "national
production" processes are repeatedly raised and are
waiting to be resolved in terms of modern
requirements.
Many economists consider the process of
formation of the domestic economy (in terms of the
national economy), both at the regional level and at
the level of any country in the region, as the activity
of national economies that produce goods and
services with the capital of local (national)
entrepreneurs.
Can communicate directly with markets and is
mainly engaged in export-oriented production.
Enterprises engaged in such production can create
assets in foreign countries, where they have the
opportunity to set up a business and bring currency
to their country.
The long experience of the South Caucasus
economy shows that one of the main factors
influencing economic development in the system of
foreign economic relations of the region and thus
international economic development is the export
and import of goods and services.
According to recent economic research, the
direct link between the South Caucasus region's
foreign trade and economic development has been
strengthened since the 1990s, when all three South
Caucasus countries seceded from the former Soviet
Union and embarked on a path of independent
economic development. real facts and empirical
research have multiplied.
Because, in the world practice, there have been
regions of the world that for a certain period of time
have taken a leading position in world markets and
thus in international trade, making their national
production export-oriented.
3 Literature Review
For example, it is necessary to conduct empirical
research based on real facts and local features of the
South Caucasus by studying the experience of the
Southeast Asian region, which includes countries
such as Singapore, South Korea, Malaysia, Hong
Kong, and others.
For the assessment, it is necessary to substantiate
the idea that there is an empirical link between the
exports of the South Caucasus as a whole, and each
country in the region, and GDP, and that exports are
the main driving force of economic development,
[6].
For example, the French economist Michel
Michael, based on a comparative analysis of the
direct relationship between economic development
and exports by region, concluded that although there
is a direct link between per capita income and
exports in one region or another, the level of that
relationship varies from region to region .
Such a result is more concrete, in that is, as the
national income per capita increases, the idea of
strengthening the link between export growth and
economic development is put forward and
appreciated.
The research of many foreign economists who
have continued such research has yielded interesting
results and assessments covering a wider group of
countries.
Thus, a joint study by British economists Jang
and Marshall concluded that along with the impact
of exports on economic development, economic
development also has a negative impact on the
expansion of exports.
Thus, as a result of economic development, the
growing volume of production exceeded domestic
demand, so it was necessary to export the goods
produced for sale abroad.
In addition to the above results and assessments,
the impact of export growth on the economic
development of the South Caucasus region, like
many other regions of the world, should be assessed
in terms of the positive impact of export growth on
economic development.
In this sense, the statistical analysis of the
economic development of the South Caucasus
shows that the main reason for the growth of the
region's GDP is international trade in goods and
services and international investment.
4 Analysıs And Evaluatıon
The impact of the South Caucasus economy on the
development of international trade has accelerated
since the beginning of the 21st century and is
currently growing steadily.
However, looking at the economies of the three
republics in the South Caucasus, it is clear that in
the recent past, when those regions and countries
were part of the USSR, the region as a whole and
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individual countries could not enter into
independent foreign trade relations. the specific
weight of imports and exports could be clarified.
Looking at the Figure 4 of that period, it is clear
that among the republics of the South Caucasus,
Azerbaijan had a larger share than Georgia and
Armenia, not only in terms of its export potential
but also in terms of volume and share of exports.
Even according to the allocations to the former
union budget, the share of the Azerbaijani economy
was very large, [6].
Progressing confidently on the path to economic
independence, Azerbaijan is strengthening its
position in the South Caucasus in terms of its level
of economic development and maintaining its
leadership (Table 3).
Table 3. GDP of the countries of the South
Caucasus region (in billions of US dollars)
Countries
2005
2010
2015
2016
2017
2018
2019
2020
Azerb.
13,2
52,9
53,0
37,9
40,8
47,1
48,0
49,5
Georgia
5,6
22,6
35,7
20,5
22,7
24,2
25,1
26,0
Armenia
4,9
9,3
10,6
10,6
11,5
12,4
13,6
14,2
Source: author’s work .
As can be seen from Table 3, Azerbaijan is far
ahead of the other three republics of the South
Caucasus in terms of GDP growth. Let's look at a
clearer picture in the diagram. As can be seen from
Figure 4.
Thus, from 2005-2020, Azerbaijan's GDP was
twice as high as in Georgia and about 3.5-4.0 times
higher than in Armenia’s., [7]. We must take into
account what part of the GDP produced in all three
republics of the South Caucasus enters the sphere of
international trade. In this sense, it is necessary to
assess what part of the GDP produced by each
country in the South Caucasus is exported to which
regions of the world, [8].
Azerbaijan is at the forefront of the South
Caucasus region, both in terms of its export
potential and the total volume and share of its
export-oriented part in the GDP produced, [8].
Although oil and gas make up the bulk of
Azerbaijan's exports of goods and services (about
90% of total exports), the gradual development of
the country's non-oil sector is already predicting a
possible change in the structure of Azerbaijani
exports. As Azerbaijan's export potential grows, so
does its competitiveness, technological
development, resilience to slander, and structural
change in the economy in favor of the non-oil
sector.
Fig. 4: GDP of the countries of the South Caucasus
region.
Source: [5]
This direction is very important for the economy
of the South Caucasus, including Azerbaijan, to
reveal its export potential.
World experience shows that in regions with
weak exports, domestic demand is weak, and
economic resources are not used efficiently, which
does not create incentives to attract new equipment
and technologies for mass production.
In this sense, the rapid development of the non-
oil sector along with the oil and gas sector in the
region's economy, especially the export potential of
the processing industry, agriculture, and tourism is
very large. The experience of recent years shows
that regions with small territories have more foreign
trade turnover than large regions.
At the same time, the balanced ratio in the import
and export operations of these regions tends to
change regularly in favor of exports.
This can be seen in the statistics of all three
republics of the South Caucasus region (Table 4).
As can be seen from the data in Table 4, the
foreign trade turnover of the South Caucasus region
as a whole and the volume of exports and imports,
which are its components, tended to increase over
the years.
Y = 2,5571x + 31,293
R² = 0,2287
0
10
20
30
40
50
60
1 2 3 4 5 6 7 8 9 10
GDP of the countries of the South
Caucasus region
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Table 4. Exports and imports of three republics of the South Caucasus region (billion US dollars)
№
Republics
2005
2010
2015
2016
2017
2018
2019
2020
1.
Azerbaijan's
foreign trade
turnover,
including
exports and
imports
8558
2796
21945
21946
24103,3
30955,0
33302,8
35207,5
4347
21360
12729
13457
15320
19489,1
19635,6
19877,5
4211
6600
9216
8489
8783,3
11465,9
13667,2
15230,5
2.
Georgia's
foreign trade
turnover,
including
exports and
imports
3.4
6.8
9.9
10.8
12.0
13,9
15,7
16,9
0.9
1.6
2.2
2.6
2.9
3,1
3,8
4,5
2.5
5.2
7.7
8.2
9.1
10,8
11,9
12,4
3.
Exports and
imports
including
Armenia's
foreign trade
turnover
2.8
4.7
4.7
5.1
6.3
7,4
7,2
7,3
1.0
1.0
1.5
1.8
2.2
2,4
2,4
2,5
1.8
3.7
3.2
3.3
4.1
5,0
4,8
5,0
4.
Foreign trade
turnover in the
South
Caucasus,
including
exports and
imports
8564.2
27971.5
21954.6
21961.9
22611.1
30976,3
33325,7
35231,7
4348.9
21362.6
12732.7
13461.4
13816.0
19494,6
19641,8
19884,5
4215.3
6608.9
9226.9
85.005
8795.1
11481,7
13683,9
15247,9
Source: Azerbaijan State Statistics Committee, [9].
However, the slowdown in growth over the first
few years, especially in 2015, has shown that the
international financial crisis, which intensified in
2014, has affected the economies of both the region
as a whole and the individual republics in the
region, [8].
At the same time, it led to an unequal increase in
the volume and structure of imports and exports,
despite a decrease in the total volume of both
foreign trades.
Azerbaijan ranks first among the countries of the
region in assessing the results obtained by
comparing the indicators listed in Table 4. Thus, all
aspects of foreign trade turnover in the South
Caucasus as a whole and the positive progress in
exports and imports, in particular, are related to the
Azerbaijani economy and the advantages of its
foreign economic relations, [9].
It is no coincidence that Azerbaijan, as a leading
country in the South Caucasus, has a large foreign
trade turnover and is of exceptional importance in
the impact of the South Caucasus as a whole on
international economic development, [10].
This can be seen not only in the growth of the
total foreign trade turnover of the three republics of
the South Caucasus but also in the growth of the
total volume of exports.
Thus, while Azerbaijan’s exports increased 3.5
times in the 10 years covering only 2005-2015, this
Table 4 increased 2.0 times in Georgia and 1 time in
Armenia.
In recent years, the political situation in Georgia
is also stable, the elections are held in relatively
peaceful conditions. It is true that the deterioration
of the political and economic situation in Armenia,
another country in the Caucasus at that time, had a
clear negative impact on the social situation in the
country, [11].
As Georgia is a small open economy, its
development depends significantly on foreign
investment, trade, tourism, foreign financial inflows,
WSEAS TRANSACTIONS on COMPUTER RESEARCH
DOI: 10.37394/232018.2024.12.13
Irshad Karimli, Reyhan Azizova,
Ramal Karimov, Ilkin Bayramov,
Abdulla Jasim Al Shamsi
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and aid. Georgia ranks 16th out of 184 countries in
the Global Economic Competitiveness Index.
This means that the Georgian economy is very
sensitive to the processes that are stoning the
economies of other countries.
Though the average annual growth of the
Georgian economy slowed down in 2013-2017, in
2016 the Georgian economy grew by 2.2%.
The slowdown in economic growth in 2013 was
mainly due to uncertainty about the change of
government and the choice of a new government.
This can be seen in the graphical representation of
the other 3 countries of the South Caucasus,
including Russia and Turkey, [12].
Since 2017, when the price of oil fell sharply on
the world market and the US Federal Reserve
unexpectedly lowered the dollar’s interest rate, the
value of the national currencies of all three countries
in the South Caucasus region fell sharply, imports
and remittances fell. National currencies depreciated
rapidly.
This situation in the economies of the countries
has led to an increase in prices for consumer goods
and services by increasing inflation.
The depreciation of the national currencies of the
South Caucasus countries in 2013-2017, in itself,
reduced the nominal income against the dollar.
This can be seen more or less in the change in the
real incomes of the population of all three countries.
If we examine the economic indicators of
different countries in the South Caucasus, it
becomes clear that not only the financial and
economic, but also the socio-economic indicators of
each country are reflected in different results. This
can be seen in the difference in the amount of
annual per capita income in US dollars for all three
countries, [13].
In calculating this indicator, the total population
of each country and the actual number of people
living in the country must be taken into account.
For example, even though the actual population of
Georgia is 3.9 million, the 4.5 million population in
the general census does not fully reflect the reality
of per capita income, [14].
With such a calculation in Armenia, a more
significant distortion of the actual number of people
living in the country has led to an unrealistic
calculation of per capita income [15].
With the current population of Azerbaijan
exceeding 10 million, the nominal per capita income
is growing, given the country’s rapid population
growth, which indicates that growth in the South
Caucasus is faster than in other countries in the
region. This can also be seen from the data shown in
Figure 5.
Fig. 5: Average annual per capita income US dollars
2017 year.
Source: [5]
Thus, in Figure 5 the above assessments show
that foreign trade, especially the export potential of
the region, is of special importance in the economic
development of the South Caucasus region and the
impact of the region on international economic
development as a whole.
In this sense, the processes taking place in the
Azerbaijani economy in recent years, first of all,
ensure economic and social development in the
country, improving the living standards of the
population, increasing exports of non-oil products,
especially processing industry, agricultural products,
and expanding tourism. Gives a boost, [16].
This research realizes that people positive
impact on the lives of the inhabitants of the country.
At the same time, it will give a push to the rapid
development of green economy in Azerbaijan, [17].
5 Result
On the other hand, the impact of modern
globalization on all sectors of the South Caucasus
economy itself requires improving the structure of
trade in goods and services not only with the
countries of the region but also with countries near
and far abroad.
This ensures the competitiveness of the world's
regions in world market prices and sales of goods
and services.
As a result, it is necessary to assess the
interdependent economic processes between the
economic development of the South Caucasus and
3759
8838
3596
3272
9317
17690
26100
8880
10100
21150
Y = 1670,8x
R² = 0,7575
05000 10000 15000 20000 25000 30000
Azerbaijan
Russian
Armenia
Georgia
Turkey
purchasing power nominal income
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international economic development, which are
more related to the international economic sphere:
Fig. 6: Dependence between the economic
development of the South Caucasus and
international economic development.
Source: [5]
As can be seen from Figure 6 the above will
allow us to draw the right conclusions in assessing
the impact of the South Caucasus economy on
international economic development.
In this sense, the main goal of the economic
strategy for the South Caucasus region is to solve
existing problems in the field of international
economic relations, first of all, political and then
economic problems, to ensure mutual understanding
and effective coexistence within international law.
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Fifth, the countries of the region prefer to pursue an effective
foreign economic policy,
Third, competition in international markets and increasing the
competitiveness of the economic sectors and sub-sectors of
the South Caucasus in those markets; Fourth, increasing the
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international economy;
WSEAS TRANSACTIONS on COMPUTER RESEARCH
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Contribution of Individual Authors to the
Creation of a Scientific Article (Ghostwriting
Policy)
- Irshad Karimli, Ramal Karimov carried out the
simulation and the optimization.
- Reyhan Azizova has organized and executed the
experiments of Section 4.
- Abdulla Jasim Al Shamsi was responsible for the
Statistics.
Sources of Funding for Research Presented in a
Scientific Article or Scientific Article Itself
No funding was received for conducting this study.
Conflict of Interest
The authors have no conflict of interest to declare.
Creative Commons Attribution License 4.0
(Attribution 4.0 International, CC BY 4.0)
This article is published under the terms of the
Creative Commons Attribution License 4.0
https://creativecommons.org/licenses/by/4.0/deed.en
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DOI: 10.37394/232018.2024.12.13
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Abdulla Jasim Al Shamsi
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