Azerbaijan Gap Analysis

The country's progress in democratic reforms is particularly concerning, with five of the six democratic reform dimensions tracked by Freedom House having backslid significantly since 1999. Independent media and the electoral process reforms have regressed the most, while governance reforms have seen little net change from 1999 to 2009. Azerbaijan's economic performance, on the other hand, has been exceptional, with an annual average growth rate of 16% from 2002 to 2010, well above both global standards and Eastern European standards. The country's economy weathered the global economic crisis in 2009 well, due in no small part to its robust oil sector. However, the impact of Azerbaijan's dependence on oil is evident in key indicators of the country's integration into the global economy, including volatility in the current account balance and foreign direct investment flows. Azerbaijan's human capital challenges are substantial, with education enrollment rates varying tremendously according to the level of education. Gross enrollment rates in primary and secondary schools are actually greater than 100%, indicating that some students are "repeaters" and are older than the school age category. In contrast, pre-primary enrollment rates and tertiary enrollment rates are very low. Tertiary enrollment in Azerbaijan is roughly 15%, well below what it was in Azerbaijan at the outset of the transition and well below tertiary rates in the large majority of E&E countries today. The quality of education at least at the secondary level is notably below OECD standards and is deteriorating. There is also evidence of a significant mismatch between skills developed in schools and skills needed by businesses. Public spending on education in 2008 in Azerbaijan was 1.9% of GDP, the lowest percentage dedicated to education in the E&E region. Azerbaijan's public spending on education has continually declined since the collapse of communism, from 7.6% of GDP in 1993. Most health indicators suggest that the general health of the Azeri population is improving, though health standards remain quite low by E&E norms. Life expectancy in Azerbaijan has been increasing since 1998 and at a faster pace than the rate of increase in Eurasia on average in more recent years. The incidence of tuberculosis has been gradually decreasing in Azerbaijan, though it remains high by E&E standards. Azerbaijan's peace and security score is roughly average by Eurasian standards, with six Eurasian countries being less peaceful and secure than Azerbaijan. Azerbaijan is most advanced in counter-narcotics and well above Eurasian average on that dimension, but lags the most in combating weapons of mass destruction and is notably below the Eurasian average on that dimension. The country's economic and democratic reforms are also a concern, with no measurable economic reform progress made in Azerbaijan in 2010 by EBRD measures, and backsliding in democratization occurring in Azerbaijan in 2009 according to Freedom House scores. Only Uzbekistan, Turkmenistan, and Belarus lag significantly more in democratic reforms than Azerbaijan, and only five E&E countries are farther behind in economic reforms than Azerbaijan.