WHAT information. I used information from other reports

WHAT
CAN STIMULATE ENTREPRENEURSHIP IN AZEBAIJAN IN CURRENT VOLATILE SITUATION In
this essay, I will examine methods of promoting small entrepreneurship in
Azerbaijan. The purpose of the paper is to search and analyze data about
small entrepreneurship and current economic situation in Azerbaijan and
making some suggestions to improve small entrepreneurship in Azerbaijan. I
began my essay by explaining the meaning of small entrepreneurship and the
general economic situation in Azerbaijan. Then I identified factors that have
some impact on developing of entrepreneurship. These factors were discussed
and explained them using available information. I used information from other
reports that investigated the economic situation in Azerbaijan. Statistical
data also was used. And at the end of the essay I wrote the summary what
should be taken into account while stimulating small entrepreneurship. Many
researchers define entrepreneurship as a process rather than a static
phenomenon. Small entrepreneurship is defined as a business with the number
of employees less than 500. Small entrepreneurship is managed and created
privately. The number of employees in such a business is usually small. The
idea behind the small entrepreneurship is commonly a new product or service
that was not previously entered into the market. The owner of this business
puts her or his financial security in a risky way. Earning more money and
being your own boss are among the factors that motivate people to run a new
business. One thing that differs entrepreneurship from other businesses is
innovative ideas that push people to become entrepreneurs. Small-scale
entrepreneurship influences the local economy in a positive way by employing
local residents. This type of businesses also helps to increase diversity by
providing women and minorities with jobs. Small entrepreneurship can be found
almost in each industry. Some examples are law firms, restaurants, stores and
etc. Many big companies depend on small entrepreneurship for completion of
different business processes through outsourcing. Another advantage of small
entrepreneurship is the quick adaptability to changing conditions. Very often
small businesses become international big companies due to their ideas that
changed the world. But on the other hand, small businesses are the first that
start to fire their employees during the financial crisis. To identify some
methods that will motivate entrepreneurs in Azerbaijan we should firstly look
at the current economic situation in the country. In 2016 economy of
Azerbaijan dramatically decreased. In the 2017 decrease by 1 % in GDP was
forecasted. The GDP was 37.85 billion US dollars in 2016. Azerbaijan’s GDP is
0.06 % of world’s GDP. The inflation rate was 14 % in January-August in 2017.
The previous year was marked by the expansion in fixed investment (first in
the last years) and overall strong performance in the non-oil industry. Also,
demand for Azerbaijani goods increased. Azerbaijan’s economy fluctuates very
much (increasing one year and dramatically decreasing in the next year).
Sustainable growth is what the economy needs most of all. Sustainable growth
is created by continuous creating wealth (developing entrepreneurship). And
the relevant conditions for entrepreneurship measured by the effectiveness of
the introduced reforms. The main purposes of economic policies and strategies
for the last years are to concentrate more on non-oil industry and decrease
unemployment rates as well as to raise the wellbeing of the nation. Entrepreneurship
plays very important role in improving of the non-oil sector. Encouraging
startups to expand and develop can significantly assist to achieve these
goals. The government should help entrepreneurs in indirect ways such as
funding, minority sponsorship and entreprise zones. Despite some positive
movements in non-oil industry entrepreneurship is very low in Azerbaijan and
considered by many people as very risky. And this prevents people from
developing their entrepreneurship skills. I think that every person can be
entrepreneur. In my opinion, only government can manage to foster small
entrepreneurship in the continuous and reliable way. Because only government
has enough resources and power to develop small entrepreneurship. There are
some aspects which are closely related to business issues that stimulate
entrepreneurship. In the last years, some reforms and programmes were
introduced by the state authorities. Despite general positive character of
these reforms, they have many limitations. Therefore, if the government is
intended to improve small-scale entrepreneurship it must pay attention to
some general aspects and focus on long-term results. And the main focus of
the government should be non-oil sectors such as agricultural sector, service
sector and etc. There are some factors that influence the development of
entrepreneurship: Lack of competition Economic situation Financial illiteracy
Public opinion Limited financial resource To start a new innovative business
first of all people needs incentive. Incentives can be created by
entrepreneurs themselves or government can create these incentives by
providing them with good ideas that are favorable in the market (local
mainly). First of all, the government should motivate small entrepreneurship.
The best motivations for entrepreneurs to earn more profit and achieving
incredible results. The motivation for entrepreneurs lye in profitability of
the new business. Entrepreneurs would take some risk but they would not
choose the riskiest opportunity. There are some measures of risk such as
political attitudes, environmental issues, resources and market size. Al of
these measures can be influenced by the government at some point in direct or
indirect ways. The government must create a strong economic legal base that
creates an appropriate environment for small entrepreneurship. Establishing
laws to support domestic and foreign investment also must be one of the key
objectives of the government. Fair competition is the main factor of developing
of entrepreneurship. Barriers to entering and exit should be removed.
Emerging of monopolies should be prevented. Wide access to the inputs should
be established. Monopoly system slows developing of the economy.
Unfortunately monopolies are the traditional part of Azerbaijan’s economy.
There are only several areas where many companies interact. Prices for
identical products should be at the same level. Thus another aspect rather
than price should be accounted by the customers while buying products. In
Azerbaijan, there is not so much capital available for startups. Bank loans
are very expensive too. According to some conducted researches, entrepreneurs
believe that interest rates for bank borrowing are very high Almost 90% of
private firms in Azerbaijan was established on private resources and savings.
The vast majority of the banks require collateral (103.5%) what one the
factors that stop entrepreneurs from taking bank loans. Policies to establish
and develop Research and Development structures are very important because in
Azerbaijan there is no research collaborations. According to the conducted
research, 97 % of firms had no Research and Development expenditures in the
last years. Researches should be consumer-based and identify the most
perspective industries for development. In order to develop entrepreneurship
in Azerbaijan transfer of technology and knowledge can also assist. And open
trade is a source of knowledge and technology transfer. International
experience in this field would be very helpful. Developing policies include
methods such as funding, grants and tax credits. Tax burden can be reduced to
more reasonable amounts. And tax system, in general, should be simplified. I
suggest that percentage of income collected as tax should be higher for big
companies and lower for small entrepreneurship. This will motivate
individuals to start their own businesses. Good functioning reliable
infrastructure is essential to form a good climate for entrepreneurship.
Access to this infrastructure should be provided to all citizens. Secured
transactions are essential to SMEs. Surveys show that entrepreneurs are not
happy with the security of transactions in Azerbaijan. Well functioning legal
transactions system give confidence to the businessmen. This system is a core
part of the healthy investment climate and therefore would stimulate
investment flow to Azerbaijan. For now, healthy environment for transactions
is not one of the key points of the reforms. I think authorities must change
their attitudes toward this situation. Laws in Azerbaijan related to the
transactions in private sector are Law on Mortgage 2005 and Civil Code 1999,
which allow formation security transactions in both movable and immovable
property. They need significant changes if the government decides to improve
small-scale entrepreneurship. I want to mention that in the last year some
reforms for SMEs were introduced which increased the number of registered
businesses by 30 % in only 1 year. These reforms included eliminating a
number of responsible legal bodies reducing it to one – The Ministry of
Taxes. It has greatly simplified the licensing system. Another aspect that
will foster entrepreneurship is increasing access to the information. There
are no reliable sources of information in Azerbaijan, especially in the
financial sector. For example, there are many founds formed by the
government( The Azerbaijan Investment company, The Baku business Training
center, The Azerbaijan export and investment promotion Foundation) to help
individuals to raise capital for startups, but the public has no or very
limited information about these opportunities. If people would be aware of
opportunities existing for them, they would be more stimulated and motivate
to start their own business. So creating and promoting a reliable source of
financial information would foster entrepreneurship in Azerbaijan. The
information provided can include data about entrepreneurs who succeeded with
the help of these funds and policies Investing in education. Appropriate
education can be provided to university students and to high school students.
A number of students choosing economy related specialties continue to
increase. I think that this education must primarily concentrate on motivating
students to explore their innovative ideas rather than focusing only on
theoretical education. Many young people in Azerbaijan have very good and
innovative ideas, but many of them think that there are not enough
opportunities in Azerbaijan to explore their ideas. The education system can
influence this view by providing some courses and training to increase
students confidence. Skills should be developed to support the economy and
especially priority sectors. Informative training can play crucial the role
if to organize them properly. But in general, in this development of skills
there is not so much that can government affect. Entrepreneurship skills
developed by individuals themselves in the good economic environment. To
develop entrepreneurship skills individuals should develop creativity.
“Creativity is the root of entrepreneurship”- says Kandre
Leopariote. Creativity means seeing usual things in the different way. And to
develop entrepreneurship first creative skills should be developed.
Entreprepreneurs go through many failures before achieving success. So they
should learn never to give up. Furthemore entrepreneurs should know how to
manage financial resources and have good communication skills. At last
entrepreneurs should always keep learning to identify the most benefical
strategies. I believe that each person can be an entrepreneur if he/her wants
to be entrepreneur. Public opinion is another important tool to develop
entrepreneurship. In Azerbaijan preferred the view that only people who have
money and power can start a successful business. The government should
encourage middle and low-class individuals to explore their innovative ideas.
Government can use media social services to encourage people. In Azerbaijan
prevails the view that only people who have money and power can start a
successful business. The government should encourage middle and low-class
individuals to explore their innovative ideas. I want to provide some data
according to conducted surveys. The main barriers to entrepreneurs, relying
on the survey, in Azerbaijan are: 1.Difficulty in finding partners 2.Large
initial investments 3.Funding 90 % of firms have only one founder while only
3 % of them are women. Not finding a job was one of the reasons why
entrepreneurs decided to start their own business. 62 % of entrepreneurs have
a bachelor degree and only 27 % have a postgraduate degree. The average size
of the firms is 46 employees. The analysis of previous years shows that
entrepreneurship level in Azerbaijan is very low but the share of innovative
entrepreneurship is even much lower. Only 13 % of surveyed firms said that
they introduced to the market new type of a product or service. Market
struccture, size and fair competition determine capacity of entrepreneurs to
introduce a new product to the market. And the main object of introducing a
new product service was to diversify it from already existing products or
services. Increase in foreign sales was not indicated as a reason. 5 % of the
population in Azerbaijan own a business. Another measure is to determine the
number of people who are willing to be entrepreneurs. This figure in
Azerbaijan is approximately 8 %. Only 30 % of those who tried to start a
business was successful. In conclusion, I want to say that Azerbaijan is a
country of big opportunities. There many people with innovative ideas that
are only waiting to be realized. Entrepreneurship can be developed in many
areas, after establishing reliable economic conditions and environment. And
if government choose right, continuous strategies and develop education, tax
system, information system and legal system entrepreneurship and economy in
overall will achieve a level of developed countries in a short period. By
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