The Institute of Economics Azerbaijan National Academy of

The Institute of Economics Azerbaijan National Academy of Sciences The Networked Readiness Index: dependence from freedom of foreign trade and its economic importance Leyli Allahverdiyeva, Ph. D www. economics. com. az Beijing, China, May 14, 2019

The Institute of Economics Azerbaijan National Academy of Sciences To what extent should the government regulate foreign trade to stimulate information services sector? www. economics. com. az Beijing, China, May 14, 2019

The Institute of Economics Azerbaijan National Academy of Sciences Method of the research v The Networked readiness index (WEF, 2016) v Foreign trade sub-index (Institute of Economics of ANAS, 2016) FTi= (FTFi + EVIi + TFi) / 3 where FT - FT sub-Index, FTFi - Foreign Trade Freedom (Fraser Institute, 2017), EVIi - Economic Value of Imports (WEF, 2016), and TFi - Trade Freedom (The Heritage Foundation, 2016). www. economics. com. az Beijing, China, May 14, 2019

The Institute of Economics Azerbaijan National Academy of Sciences Scale 1. Foreign trade sub-index, 2016 China Azerbaijan İran 0. 550 Leftness of economy www. economics. com. az 0. 450 0. 350 Relative center (0, 244) 0. 250 Singapore 0. 150 0. 050 Rightness of economy Beijing, China, May 14, 2019

The Institute of Economics Azerbaijan National Academy of Sciences Hypothesis: The more liberal foreign trade is, the higher is the level of development of ICT; this in its turn, will be the reason of increase in the level of information services sector’s development. www. economics. com. az Beijing, China, May 14, 2019

The Institute of Economics Azerbaijan National Academy of Sciences Diagram 1. Foreign trade sub-index and Networked readiness index in different countries of the world, 2017 R 2 = 0. 3498 6 5 4 3 2 1 0. 600 0. 500 0. 400 0. 300 0. 200 0. 100 Networked readiness index 7 0 0. 000 Foreign trade sub-indeks Sources: The World Economic Forum, The Global Information Technology Report , 2016; The Official Website of The Institute of Economics of ANAS, 2016 www. economics. com. az Beijing, China, May 14, 2019

The Institute of Economics Azerbaijan National Academy of Sciences Table 1. Regression between the FTI and components of the NRI, 84 countries Components of NRI R F-significance Political and regulatory environment 0. 478 4. 2946 E-06 Business and innovation environment 0. 679 1. 281 E-12 Infrastructure 0. 630 1. 4139 E-10 Affordability 0. 028 0. 80371375 Skills 0. 575 1. 0656 E-08 Individual use 0. 589 3, 75 E-09 Business use 0. 453 1. 4979 E-05 Government use 0. 371 0. 00051954 Economic impact 0. 506 9. 0176 E-07 Social impact 0. 528 2. 5046 E-07 www. economics. com. az Beijing, China, May 14, 2019

The Institute of Economics Azerbaijan National Academy of Sciences Table 2. Dynamics of average indicator of Networked readiness index according to the intervals of Foreign trade sub-index www. economics. com. az FTİ intervals Average NRİ 0 -0. 200 4. 9 0. 201 -0. 300 4. 5 0. 301 + 3. 8 Beijing, China, May 14, 2019

The Institute of Economics Azerbaijan National Academy of Sciences Diagram 2. Foreign trade sub-index and Networked readiness index in Azerbaijan, 2008 -2016 0. 340 4. 30 0. 330 4. 20 4. 10 0. 320 4. 00 0. 310 3. 90 3. 80 0. 300 3. 70 0. 290 3. 60 0. 280 3. 50 3. 40 2008 NRI 3. 93 FTI 0. 325 Foreign trade sub-index Networked readiness index 4. 40 2009 3. 75 0. 332 2010 3. 79 0. 297 2011 3. 79 0. 299 2012 3. 90 0. 313 2013 4. 10 0. 301 2014 4. 30 0. 321 2015 4. 30 0. 315 2016 4. 30 0. 306 0. 270 Sources: The World Economic Forum, The Global Information Technology Report , 2016; The Official Website of The Institute of Economics of ANAS, 2016 www. economics. com. az Beijing, China, May 14, 2019

The Institute of Economics Azerbaijan National Academy of Sciences GDP per capita, doll. USA, PPP Diagram 3. Networked readiness index and GDP per capita (doll. USA, PPP) in different countries, 2017 140000 120000 100000 80000 60000 40000 20000 0 0 1 2 3 4 5 The Networked Readiness Index 6 7 Sources: The World Economic Forum/ The Global Enabling Trade Report, 2016; The World Bank/ GDP per capita, PPP, 2017 www. economics. com. az Beijing, China, May 14, 2019

The Institute of Economics Azerbaijan National Academy of Sciences Conclusions v To increase the Networked readiness index characterized the level of development on information services sector, in foreign trade policy of the state the liberalism must prevail over administrative regulation (tariff barriers must be low, restrictions on foreign property must be minor, investment environment created foreign investors must be favorable). At the same time, it has to be taken into account that along with foreign trade policy of the state, the other factors also impact on the Networked readiness index. v Usually (but there are some exceptions), in more developed countries the Networked readiness index is higher than in less developed countries. v The higher the Networked readiness index is, the higher is per capita GDP. However, measures to increase NRI can be not sufficient for it, because of the other factors influencing on the level of economic development. www. economics. com. az Beijing, China, May 14, 2019

The Institute of Economics Azerbaijan National Academy of Sciences Thank you for attention! www. economics. com. az Beijing, China, May 14, 2019