• Environmental and Resource Economics Review
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• v.19 no.2
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• pp.413-440
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• 2010

Since 2000, as importance of sourcing energy emphasized caused by instability of international oil price, interests toward Caspian countries as an alternative markets has increased. Especially, Azerbaijan, as middle Asian emerging exporting country, has performed drastic economic boom because of massive amount of foreign capital flowed in and construction of BTC pipeline. However, despite this economic surge, there are unbalanced economy which is merely focusing on energy industry and pressure from increase in real exchange rate and inflation. In order to analyze the sustainability of Azerbaijan economy, the total sample time period of this paper is from January 2001 to December 2007 and the term is divided into before and after BTC line construction. Vector Error-Correction Model has been applied to analysis confirming short-term and long-term effect. As a result, Azerbaijan now face the symptoms of the recession during the time period and this is due to high oil price and increase in export influenced by BTC oil pipeline resulting in decrease in real interest rate. This conclusion is to affect competitiveness of manufacturing industry, base industry for economic proliferation, in a negative way.

• Economic and Environmental Geology
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• v.41 no.5
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• pp.617-624
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• 2008

Azerbaijan, located on western part of Caspian Sea, has been developed oil and gas exploration and production business from about 200 years ago and once charged of 50% of world oil production in the early 20th century. After Azerbaijan was independent of Soviet Union in 1991, foreign oil companies, including Korean oil companies, have been investing in Azerbaijan oil business on offshore blocks. Productive capacity of downstream in the Azerbaijan is lower than productive capacity of upstream, whereas there are important pipelines, such as BTC, SCP, NREP, and WREP, provide opportunities of the oil and gas exporting to the world. Oil fields in onshore blocks in the Azerbaijan are almost mature oil fields, caused by high recovery rate. Offshore oil blocks are still high potential in oil exploration with high risk.