The Business Environment: economic reforms in the context of institutional shortcomings

Abstract

The existence of a well-functioning business environment is a key factor in the diversification of the economy, the efficient use of available resources and ensuring sustainable growth. The business environment, in its turn, should be regarded as a composite of conditions that incorporate quite complex components. If one or more of the composition components are not functioning appropriately, the result you will get is not adequate to the available capacity. The existence of contemporary institutions is the absolute requirement for a "good business environment", performing functions such as coordinating all other economic advantages, organizing appropriate arrangements, and risk management. In the 21st century, policies aimed at the development of the economy are only possible through institutional reforms. The existence and effectiveness of relevant institutions and incentive mechanisms in the process of involving global resources (investment, tested experience, integration advantages, etc.) is considered to be one of the most important advantages. It is hard to imagine the development of modern economies without these global resources. The sharp decline in oil prices since the second half of 2014 created serious difficulties for the Azerbaijani economy, which renowned for its hydrocarbon wealth. The government therefore has begun broad-based reforms in the economy. However, the growth trend in the real economy remains weak despite extensive reforms in the legal sphere and new incentive mechanisms. In other words, delays in implementation of reforms in the economy have been observed. We will try to briefly review the reasons for these delays in this article.