EconomicsSupply Chain Market conditions in Azerbaijan and how it Research Proposal

EconomicsSupply Chain Market conditions in Azerbaijan and how it affects ability to get and pay labor - Research device Example(Maharramov, 2003).Recently, Azerbaijan has witnessed solid economic growth over the last 5 years. This growth has been driven by domestic demand including non-oil private investments, public investments, government expenditures, consumption expenditures or households and oil exports. Real gross domestic product has also witnessed tremendous growth owing to growth in the non-tradables sectors including transportation, construction, and public utilities. The capacity constraints however did non enable the sum to grow as rapidly as demand leading to inflationary pressures. The objective of this paper is to provide a discussion of the labour cost drivers, labour demand drivers, and labour supply drivers in Azerbaijan.According to macroeconomic theory the net income value usually depends on the price level. The high the price level the higher will be the real mesh rate demanded by workers. Azerbaijan is soon suffering from high rates of unemployment. As a result the wage rates are really number 1. According to the Human Development and Central Unit (HDCU) and European and Central Asia Region (ECAR) (2005) a immense major(ip)ity of people in the city of Mingachevir an Industrial city have become redundant as a result of lack of demand for products, which has culminated in production stoppage, bankruptcy, liquidation and corporate restructurings. This has driven the wage rates to very funky levels. Based on this one can say that a major determinant of labour cost on Azerbaijan is the demand. The demand for labour in Azerbaijan is currently very secondary and as such people are willing to supply labour at very low wage rates. The survey by the ECAR and HDCU (2005) suggests that only 3% of the unemployed left their job voluntarily. While somewhat workers are not being paid at all, there is also a high stratum of wage arrears.sI n 2001 exports accounted for 44% of GDP in Azerbaijan with hydrocarbon products being the dominant export activities, contributing to 91.5% of match exports in 2001. The remaining share of exports consists of raw and processed food products, mechanical equipment and chemical product. (Navaretti, 2003). The largest share of imports is make of machinery for the oil industry, food products, other mechanical equipment and luxury consumer goods for the high-income part of the population. Many of the countrys traditional products in the domestic market have been replaced by imports because they are unable to withstand the competition of import products. (Navaretti, 2003). Figure 1 below shows that the real wages have taken a smoothward trend since 2005 to record low levels over the period 2001 to 2006. The figure also indicates that the non-oil sector is lagging behind.Since imports have become higher than exports, it is liable(predicate) that the country is witnessing slow growth in aggregate demand, which in turn leads to a slow down in the growth in real GDP. This in turn creates a recessionary gap, high unemployment rate and therefore low wage rates. (CFA, 2008). From the foregoing one can therefore rightly say that the wage rate in Azerbaijan depends on the growth in Aggregate demand which has a multiplier power on the price level, real GDP growth, and therefore wage rates. Figure 13. Labour deal Drivers in AzerbaijanMacroeconomic theory posits that the demand for labour depends on three factors. These include the price of the firms output, other factors and technology. The higher the price of the