Wednesday, June 19, 2019

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 - look Proposal Example(Maharramov, 2003).Recently, Azerbaijan has witnessed solid economic exploitation over the last 5 years. This growth has been driven by domestic exact including non-oil private investments, national 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 moreover did not enable the supply to grow as rapidly as demand leading to inflationary pressures. The objective of this paper is to provide a treatment of the labour cost drivers, labour demand drivers, and labour supply drivers in Azerbaijan.According to macroeconomic theory the wage rate usually depends on the harm level. The broad(prenominal)er the price level the high er will be the real wage rate demanded by workers. Azerbaijan is currently suffering from high rates of unemployment. As a result the wage rates argon very low. According to the Human Development and Central Unit (HDCU) and European and Central Asia Region (ECAR) (2005) a vast majority 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 low 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 low 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. composition some workers are not being paid at all, there is also a high degree of wage arrears.sIn 2001 exports accounted for 44% of GDP in Azerbaijan with hydrocarbon products being the dominant export activities, contributing to 91.5% of total exports in 2001. The remaining character of exports consists of raw and processed food products, mechanical equipment and chemical product. (Navaretti, 2003). The largest share of imports is made 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 downward trend since 2005 to move into 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 likely that the country is witnessing slow growth in aggregate dema nd, 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 effect on the price level, real GDP growth, and therefore wage rates. Figure 13. bear on Demand 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

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