1. Dr. Sarvar Gurbanov
SUSTAINABLE DEVELOPMENT:
NATIONAL MANUFACTURING STRATEGY
– HUMAN CAPITAL ACCUMULATION
AND CONTIRBUTION CHANCES FOR
THE NGOS
28 December 2013
1

2. Special Adviser to the United Nations Secretary-General
on the Millennium Development Goals.
• World's governments have agreed to place Sustainable
Development at the very center of the world's post2015 development agenda.
• Just as the Millennium Development Goals, adopted in
2000, have proved highly effective in the fight against
poverty and disease, the SDGs (which will succeed the
MDGs in two years) promise to address the global
challenges that we face in areas including energy, food,
water, climate, and jobs.
• Jeffrey D. Sachs, Professor of Sustainable Development
28 December 2013
2

3. 28 December 2013
3

4. • “Global manufacturing production is shifting gradually
from developed countries to developing countries, as firms
move to benefit from cheaper labor, quality infrastructure,
lower social costs and large markets in countries like China
and India.
• World manufacturing value added (MVA) peaked at
$7,390 billion in 2010 (18,2 percent of global GDP). The
manufacturing sector in developing countries has been
buoyant, with a remarkable 5.6 percent annual growth
rate in MVA over 1990 – 2010, slightly higher than the 4.8
percent GDP growth rate.
• Also, global manufacturing employment has been
shifting from developed to developing countries. This
trend is expected to intensify as more manufacturing
relocates to developing countries” (UNIDO, 2011)
28 December 2013
Global Manufacturing
4

5. Manufacturing exports
28 December 2013
5

6. Manufacturing technology
28 December 2013
6

7. 



In Japan, between 1991 – 2004, 3 million
jobs
In USA, late 1990s till today, 5,5 million jobs
In Nigeria, 1983 – 2010, 5,2 million jobs
In Cameroon, fiscal policy, improve
productivity in manufacturing, reducing
poverty rate
(In Nigeria, Only 5 percent of manufacturers
think that foreign competitors hinder their
success, 72 percent of population is poor by
2011).
Declining manufacturing
employment
28 December 2013
7

8. Importance of Manufacturing
 provides above-average-paying jobs,
 is the source of good jobs for non-college-
educated workers
 for generations, manufacturing has built
up America`s middle class,
 provides jobs which are more likely to be
full-time jobs, and have good benefits for
workers
 Multiplier effect on job creation
28 December 2013
8

9. Chinese Success
• For 25 years, China gradually built its
manufacturing base and completed its global
integration.
• “In 1986, four Chinese scientists recommended to
the government that IT be designated a strategic
sector. The request was approved and in 1988
China`s National Development and Reform
Commission designated high tech as a “pillar”
industry worthy of strategic industrial policy”
28 December 2013
9

10. Implications for Azerbaijan
• A success on reducing poverty, next step to built
up a strong middle class,
• National Manufacturing Strategy
• Determining manufacturing as the number one
priority for Azerbaijan economy will generate
three fruitful outcomes at the same time:
• building a strong middle class,
• fostering development in non-oil sectors
• and diversifying exports away from the oil sector.
28 December 2013
10

11. Crucial Document: "Azerbaijan 2020: Look into the
Future" Concept of Development
• Azerbaijan plans to increase the share of
tourism sector in GDP.
• In order to sustainable economic
development, for Azerbaijan,
• knowledge-based economy,
• science intensive technology and products
and
• expansion of innovative activities are also at
the main aims of development concept.
28 December 2013
11

12. "Azerbaijan 2020" Concept of
Development
• State Fund for the development of
information technologies will be set up; to
foster innovative entrepreneurship.
• Export-oriented ICT is priority of Azerbaijan
development policy and Azerbaijan is pretty
interested in developing
• the space industry.
28 December 2013
12

13. Azerbaijan 2020 Development Concept
• states that, there will be subsequent study
abroad program by 2015.
• I suggest that to determine science and
technology related areas for the prospective
Azerbaijani students such as: civil, computer,
industrial, chemical, military defense,
aerospace engineering, pharmaceutical,
nanotechnology, medical and so on.
28 December 2013
13

14. The Decree of the President of the
Republic of Azerbaijan
• which was announced with the
• "National Strategy of Development of
Education in Azerbaijan in 2011 - 2021" title,
lay out a working group with already
determined priorities such as establishment of
• information society and knowledge based
economy
28 December 2013
14

15. Education Model for these Goals
• I calculate the average tuition and fees for the
top 10 American Universities. This figure is
43042 US dollars.
• Starting from 2015, every year Azerbaijan can
send 3 thousand students abroad for
• acquiring and transferring modern education
and science.
28 December 2013
15

16. For the additional expenses part,
• I include 1200 US dollars scholarship per
student capita for ten months,
• 2000 dollars a yearly round plane ticket,
• 500 USD dollars for additional expenses such
as books and other course materials.
• Total additional expenses will be 19 thousand
US dollars then. (+ 43042 US dollars tuition
and fees) = 62 thousand dollars
28 December 2013
16

17. 28 December 2013
17

18. Forecast
• If 4 out of 100 students decides to pursue
Ph.D. degree in science and technology fields
• then it will let Azerbaijan
• to establish its own science and technology
university or research center for the domestic
market with 1200 scholars.
• Sustainability matters
28 December 2013
18

19. 28 December 2013
19

20. Forecast
• Considering 2011 numbers, just only 3000
workers are employed on the petroleum
refineries, which Azerbaijan does have
comparative advantage may earn Azerbaijan 31
billion dollars.
• This return is three-fold return of total cost of
the 30 thousand students abroad. Productivity of
a US worker in selected sectors are employed as
benchmark figures for the prospects of educated
labor force in Azerbaijan economy.
28 December 2013
20

21. 28 December 2013
21

22. On the other hand
• Based on official data, number of prospective
students whose central university entrance exam
grade is lower than 200 equals to 569 thousand
individuals. Considering the labor-intensive
nature of tourism industry,
• Development concept about the Vocational
Education in Azerbaijan which covers 2007 - 2012
period, includes this fact that, in developed
countries % 40 - 50 of all students are allocated
on these professional schools, but this figure in
Azerbaijan is around 5 - 8 percent
28 December 2013
22

23. 28 December 2013
23

24. Evidence Based Approach for Study
Abroad
• Azerbaijan 2020 - Development Concept: in
this critical development document, it is
stated that, Azerbaijan plans to reach the goal
of 1000 USD per capita non-oil export. By the
end of 2012, Azerbaijan total non-oil exports
equal to 1,9 billion dollars (CBAR, 5/2013)
• With the current 9,3 million citizens, percapita non-oil export is about 208 USD per
capita. (five fold increase )
28 December 2013
24

25. The EBRD - World Bank Business Environment
and Enterprise Performance Survey (BEEPS)
• which covers 287 firms in 2005 and
• 355 firms in 2008 reveal some helpful hints.
BEEPS report offers relative rank of problems,
in 2005 skills and education of workers rank
is 13, and same kind of ranking is 6 in 2008.
• The most severe problem ranks number 1, the
least 14
28 December 2013
25

26. 28 December 2013
26

27. Share of Non-Science, 58 percent
28 December 2013
27

28. Scientific Justification 1
• "High level of human capital can offset
negative effect of natural resource on
economic growth. It implies that, human
capital serves as a transmission mechanism of
resource curse" (Behbudi et al, 2010: 98 - 99).
• Human capital accumulation makes Norway,
United Kingdom and Malaysia to perform
better than Iran, Algeria and Syria
• in terms of economic growth.
28 December 2013
28

29. Scientific Justification 2
• Other study suggests that, economic reforms
and human capital accumulation are crucial
components of long-run economic growth in
India and South Korea.
• Moreover, positive effects of economic
reforms in India tend to be smaller than
Korea. Striking fact is that, one of main
hurdles is stated as human capital
accumulation (Maksymenko and Rabbani,
2011: 56).
28 December 2013
29

30. A Decree approved by the Azerbaijan
President Mr. İlham Aliyev regulate
• "Long Term Strategy on the Management of
Oil and Gas Revenues"
• On this document, one of the major objectives
is stated as follows:
• development of "human capital" (training
(including in foreign countries) highly
qualified specialists and improving
professional capacity of employees).
28 December 2013
30

31. Advantage 1
• oil boom started in 2004 in Azerbaijan. To
adopt a national manufacturing policy and
implement it can make Azerbaijan to have its
own settled non-oil industry
28 December 2013
31

32. Advantage 2
• with the collapse of Soviet Union, Azerbaijan
lost vast amount of manufacturing base. It is
advantage, because Soviet technology was
pretty outdated and
• it was not sustainable enough to keep up with
independent Azerbaijan.
28 December 2013
32

33. Advantage 3
• As central admission exams records show,
there is suffice amount of youth population
with the
• desire of education and employment
28 December 2013
33

34. Advantage 4
• Azerbaijan policymakers have vision.
• Azerbaijan President, Mr. İlham Aliyev stated a
wise byword:
• "I will convert the black gold into the human
capital" (MINCOM, 2012).
28 December 2013
34

35. Possible Contributions of the NGOs
• Increasing awareness among high school
graduates for choosing science and engineering
majors, instead of social sciences.
• Contributing to the tourism sector, by educating
the youth
• Study abroad programs (post – 2015): main focus
on the science and technology fields
• Persuading Private Sector on educating next
generation with the science majors.
• Preparing policy papers about the low graded
high school students (below 200 points)
28 December 2013
35

36. World Economic Forum – Global
Competitiveness Index 2013 – 2014
28 December 2013
36

37. 28 December 2013
37

38. International Labor Organization – Youth
Employment Forum Best Practice
28 December 2013
38

39. 28 December 2013
39

40. 28 December 2013
40

41. Thanks…
41
Thanks for your Attention...
Dr. Sarvar Gurbanov
squrbanov@qu.edu.az
28 December 2013