In direction it has changed its trajectory, we will

2015, Azerbaijan economy fluctuated widely. The main reason was that manat
lost its value against dollar consequently. If we look at the 2015 exchange
rates, manat was exchanged to dollar in 0.78 rate. Talking about today, if
you want to buy 1 dollar, it will cost you about 1.70 Azerbaijan Manat. It
just shows how direful things get changed throughout these years erratically.
Of course, it has impacts in many ranges overwhelmingly. The Enterpreneurship
is just one of many. Concerning, what does exactly influence it and in which
direction it has changed its trajectory, we will talk about it more and
broadly in the body part. What motivates a person to start a new business?
According to classical models, entrepreneurs initiate new businesses as a
consequence to unmet needs and demands in the market. That is, there is an
opportunity to provide a service or output that is not currently in
existence, or contrarily available. Economists refer to these
business-starters as “opportunity” entrepreneurs in order to differentiate
these individuals from those who start businesses for lack of better work
hope. So-called “opportunity” entrepreneurs, who launch new enterprises in
response to market needs, are key players when it comes to boosting economic
growth in a country. They enable access to services and goods that community
requires in order to be dynamic. Hence, this is not to avoid “necessity”
entrepreneurs that launch enterprises because they have no other choice. Both
can and do assist to economic expansion. If we look at the situation here in
Azerbaijan, we mostly focus on exporting crude petroleum – approximately 87%
of all exports (2016 data). It apparently shows how we depend on Oil &
Mineral Fuels and the improvement in one direction. Let`s take a closer look
on our imports. Machinery, boilers, articles of iron or steel, electronic
equipment, cereals, tobacco and manufactures tobacco substitutes,
pharmaceutical products, optical, photo, technical, medical apparatus, wood
and articles of wood, wood charcoal, plastics, lighting signs, prefabricated
buildings, sugars and sugar confectionery, sopper, inorganic chemicals,
precious metal compound, isotope, plaster, cement, asbestos, mica or similar
materials, miscellaneous chemical products, soaps, lubricants, waxes,
candles, modelling pastes are just some of it. So, it shows how big gaps
exist in our economy that we import these goods. Literally, it is an
opportunity to start a business and beat the imports back, simultaneously
meet the basic needs of people here. On the other hand, it will cost less to
populace and gather high amount of customers easily. Since, imports have lots
of taarifs, transportation costs that added up on it, local products don`t
have such problems. So it should be huge encouragement,inspiration or
optimism for enterpreneurs. International relations trigger small,
entrepreneur-led businesses to spread into regional and global markets
continuously. Firstly, it makes the entrepreneurs less worry about consumers,
because when you go out of the borders, you get more costumers interested in
the goods rather than just in the home country as a consequence of increasing
scope. Being talked about our international relations, we have great
alliances all over the world and it makes much easier for us to find a market
to handle their production, goods or if we emphasize overall – their brand.
Another point is the country itself. The government buy it itself from the
sellers and take the goods to world markets in these current years, so the
transaction and other related costs disappear for entrepreneurs. Azerbaijan
do have the storages, as well which keep the goods harmless for a long period
and whenever the producer, executive wants, he/she is welcome to take it to a
bazaar in suitable time. Additionally, entrepreneurs do need secure property
rights, the rule of law. Maintaining a decent legal system with legitimate
property rights and contract law, and an orderly bankruptcy system that
reassures lenders and enables failed entrepreneurs to get back on their feet.
If we take a look at our property rights and the legacy, which shows how it
is strong and appropriate for an enterpreneur explicitly. If we compare the
situation against Latin Amercia, Africa, South Asia contries etc., we can
easily notice that our government does everything in itself to stimulate
enterpreneurship via secure supervision and protection on the properties
which prevents from any kind of adverse violation by anyone or anything
absolutely. So, it makes high self-confidence and assurance for entrepreneurs
additionally. According to Prof. David Birch of MIT, his findings from
researchs were that job creation was not coming from large companies, but
small independently owned businesses. It recommended that a policy of
governments should target indirect rather than direct strategies with a
greater focus on the role of small firms, reform immigration and open
borders. For instance, immigrants constitute nearly two third of all new
businesses in the U.S., more than twice the amount created by the overall
population. The same is applicable to us as well. So, which factors can
stimulate foreign direct investment to Azerbaijan in the ongoing capricious
situation? Wage rates A crucial enticement for a multinational to invest
abroad is to outsource labour intensive production to countries with lower
wages. If average wages in the US are $17 per hour, it is just 2$ for
Azerbaijan, costs can be reduced by outsourcing production. Tax rates Major
multinationals, such as Microsoft, Google and Apple have sought to invest in
countries with lower corporation tax rates. For example, Ireland has been
outstanding in alluring investment from Google and Microsoft. In fact, it is
the same for small entreprenurs as well. Investing or having businness by
locals in countries like France, Japan, Mexico etc. which has the corporate
tax rate above 30%, is not appropriate for a small enterpreneur, which will
result with little amount of income at the end to him. Applying the same to
Azerbaijan, it is just 20% here, which is even twice less than some
countries. Transport and infrastructure One of the essential factors in the
desirability of investment is the transport costs and level of
infrastructure. A country may have minor labour costs, but if there is then
soaring transport costs to get the goods onto the world market, this is a
huge drawback. Countries with sea access are at an advantage to landlocked
countries, who will have huge costs to ship goods. Focusing exactly on
Azerbaijan, here both the labor cost is low, transportation, infrastucture is
much better than other competitive countries and we have the access to the
sea, so it is another source of stimulation to foreigners to start their
entrepreneurship here. Political stability / property rights Foreign direct
investment has a particle of risk. Countries with an uncertain political
situation, economic crisis, will be a major disincentive and discourage to
enterpreneurs. For example, the recent Russian economic crisis, combined with
economic sanctions, will be a trouble to attrack foreign investment. Related
to political stability is the level of trust in institutions, principally
judiciary and the extent of law and order. As we mentioned above, Azerbaijan is
highly secure and safe place and all property rights is reserved by the
government itself. That is a neat argument which attracts the entrepreneurs
and flourish the business non-stop. Exchange rate A weak exchange rate in the
host country certainly will captivate more FDI because it will be cheaper for
the multinational to purchase assets. So, an investor can just buy a few
things in Europe because of strong euro rather than Azerbaijan. So, it both
attract tourists and the investors. More tourists means more stimulation for
entrepreneurs to begin the business like pubs, lounges, cafes, hotels etc.
Imports become more expensive, any imported good or raw material will
increase in price, likewise reduces the purchasing power of citizens. So, it
forcefully stimulates entrepreneurs to produce, yield inside the borders
rather than buy it internationally, cheap goods which is caused by weak
exchange rates, deliver more and more investors, buyers in itself. All these
aren`t just factors of foreign investment, it is applicable to incentives of
locals. How it worth to foreigners, the same volume it is valuable aspects to
host country entrepreneurs as well absolutely. On the other hansd, we often
encounter those people whose startups go out of business quickly just after
being started. Entrepreneurial activities tend to deliver unfavorable results
before having positive results. Only very few businesses expand and attain
success in a visible manner within the first several years. Correspondingly,
it is rare that a project to revive the local economy and gets on the right
track from the kick off. There would be many trials and errors in the
previous stage of such an initiative, and striking success often comes after
a series of endeavor. So it would be much better if there are improved and
simplified insurance system which will help the entrepreneurs against any
failure. It will encourage entrepreneurs to start a business and they will
not be scared because of secure insurance. Another issue is education,
training. It would be exceptional if we have some consultation agencies that
enlighten entrepreneurs to find a right track, to distribute their budget
carefully. These problems hav been seen by government officials and now we
have an agency which is called National Fund for Entrepreneurship Support. It
connects both problem – insurance and consultation perceptibly and solves
these just from the begginning. It finances investment proposals of the
entrepreneurs with concessional credits which wipes out the problems in the
utilization of concessionary credits granted from the state budget,
coinciding the activity of the National Fund for Entrepreneurship Support
with the burdens to be solved on the priorities and steps of expanding of
Azerbaijan economy, strengthening of state cooperation on the
entrepreneurship and spreading out this activity. Application of these
procedures played a remarkably important role in stimulating all
enterpreneurs by means of provision of concessionary credits. In compliance
with the procedures, the proceeds of the National Fund for Entrepreneurship
Support are placed to entrepreneurs with the lowest interest (annually 7%,
and annually 5% for the programs directed to enlarging of mass media), also
installation of the concessional term of the first two parts of credit
periods and lower credit interests resulted with an exceptional interest to
these projects by enterpreneurs. Thus, we have mentioned several sources
which fuel the incentives to become an entrepreneur. If a nation wants to
succeed, make high economic growth and has its fate on his hands, then it
should create chances itself. The chain is intuitive: entrepreneurs
constitute businesses and new businesses constitute jobs, extend market
competition and increase fertility. These economic opportunities help and
uplift communities by means of raising the quality of life and overall
standard of living. Entrepreneurism shows an access to upward mobility – a
route for average people to accumulate wealth.