Economic growth transformation in Azerbaijan using real world examples

Guest blog by Namig Naghdaliyev

This is a blog series written by the alumni of the Implementing Public Policy Executive Education Program at the Harvard Kennedy School. Participants successfully completed this 6-month online learning course in December 2020. These are their learning journey stories.

One of the common age-old questions we are thinking about is a positional competition between theory and practice. This question is of utmost importance and common in economic policymaking and implementation.

Before taking this course, I was familiar with the Harvard Kennedy School’s advancing role in building threshold points, not only theory but also practice. This course assured me and made me more than confident that HKS is one of the main engines of adding global public policy values.

Each module we passed through was full of guiding insights about the challenges of public policy implementation. However, from my perspective, I can group my critical learnings into three groups 1. Formulation and implementation of public policy reforms are the engineerings of conflict of interests from the standpoint of public interests; 2. Delivery mindset is a core requirement for every successful reform team; 3. In complex environments, public policy should have more elasticity allowing adaptivity.

The challenge I worked on was “Transformation of economic growth model for Hopeland.” It was a fictionary country based on real cases and challenges from different countries. Good to underline that this course guided me to find practical solutions on solving obstacles on new growth model building under policy challenge.

Table: Fishbone diagram for policy challenge

P1Weak Rule of Law
1.1Foster Judiciary Reforms
1.2Accelerate reforms in other institutional bodies of the legal system
P2High level of monopolization
2.1Adopt competitiveness Law
2.2Establish Anti-Monopoly Committee
2.3De-monopolize the logistic sector
2.4De-monopolize the hospitality sector
2.5Establishing free tax zones for IT start-ups, provide them financial, marketing, infrastructure support to enhance the business
P3Inefficiency of the SOE sector
3.1Improving the regulatory and supervisory framework of the sector through adopting SOE law
3.2Granting regulatory and supervisory mandate to the Ministry of Finance
3.3Developing transparency, accountability, procurement, and reporting standards and procedures for the SOEs
3.4Scaling-off SOE engagement in the commercial market through privatization
P4Small size of tradable sector
4.1Create tax relief for tradable sector
4.2Promote tradable sector products in abroad
P5Lack of high skilled human capital
5.1Establishment of Human Capital Council
5.2Remodeling school management framework and enhancing the competition between schools through implementing schools’ grading systems
5.3Development IT infrastructure to deliver high-quality education services to remote places
5.4Financing Program of the education in abroad
5.5Support vocational education
P6Low qualitity of the Governance in the Public Sector
6.1Increasing the role of the PM’s Office in management of civil service in the public sector
6.2Developing KPI system for the bureaucratic apparatus
6.3De-politicization of mid and low-level bureaucratic apparatus
6.4Moving forward to the establishment of merit-based governance
P7Fiscal unsustainability
7.1Optimize mandate and structure of fiscal authority
7.2Implement fiscal consolidation
7.3Implement growth and sustainability oriented fiscal rules
7.4Improve fiscal transparency
7.5Reform the public procurement system
P8Weak monetary transmission
8.1Adopt new CB law
8.2Remodel the state-owned bank and enhance competition in banking system
8.3Increase transparency and accountability of the banking system
8.4Establish inter-bank money market
8.5Improve the quality of economic research
8.6Improve communication
P9Fixed Exchange Rate regime
9.1Increase the flexibility of national currency
9.2Develop hedging instruments
P10Unliberal market
10.1Become a member of the WTO
10.2Develop mutual trade unions with key trade partners

During the course period, we implemented essential reforms through the directions highlighted in the fishbone. Reforms are still in progress, and we have a way to go for finalizing the transformation to the new growth model. I firmly believe that my course experience will be beneficial in my future endeavors.

I liked one wisdom from a book on economic reforms – The most careful thing is to dare (Shimon Peres). I wish my fellow PDIA practitioners high enthusiasm and dare in their unvalued works – contributing to public policy by adding high values.    

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