University of Economics, Prague
Faculty of Finance and Accounting Study programme “Finance and Accounting”
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M a s t e r T h e s i s E v a l u a t i o n Supervisor form
Student name: Kamil Mammadzada
Title of the thesis: Dutch Disease Effect of Oil and Natural Gas on the Economy of Azerbaijan Republic
Year of the defence: 2021 Supervisor name
and affiliation:
Ing. Ondřej Šíma, Ph.D. (Department of Monetary Theory and Policy;Assistant Professor)
Reviewer name and affiliation:
Ing. Samy Metrah (Department of Monetary Theory and Policy;
Assistant Professor)
THESIS CONTENT SUMMARY:
The author divided the diploma thesis into three chapters. The first chapter introduces the concept of Dutch disease. The second chapter introduces the reader to the structure of the Azerbaijani economy and emphasizes its rich natural resources. The third chapter gives examples of countries that have "fought" against the negative effects of the Dutch disease.
The thesis concludes with a section of the text devoted to recommendations on what Azerbaijan could do to eliminate the negative effects of the Dutch disease.
The aim of this diploma thesis "…is to test the existence of the Dutch disease in the economy of Azerbaijan and to explain the economic disease in terms of the country's economy with the necessary macroeconomic changes…" was fulfilled.
OBJECTIONS AND REMARKS:
Kamil presents a well-written diploma thesis on the topic of Dutch disease. The concept of the Dutch disease is suitable for economies dependent on the export of natural resources (oil, natural gas ...). The concept captures well the changes that the export of these commodities can bring. The author managed to describe the economy of Azerbaijan and its changes in the context of the export of natural resources very nicely. A slight shortcoming of this diploma thesis is the excessive descriptiveness in the third chapter. Even so, this is a perfect diploma thesis.
Page 2/2 QUESTIONS FOR THE DEFENCE:
1. When applying the theory of purchasing power parity (PPP), which is based on the law of one price, it can be expected that in the event of an increase in the price of a particular product (commodity), a weakening, i.e., exchange rate depreciation, occurs, ceteris paribus. How is it possible that, despite rising prices of oil and other minerals, there is usually a (real) appreciation of the currency of the exporter of these natural resources? The theory of PPP would assume the opposite development of the exchange rate.
2. The concept of Dutch disease is used not only in the context of natural resource exports but also in connection with, e.g., international tourism exports (e.g., in the Caribbean), remittance imports (in the least developed countries), financial capital imports (e.g., in the periphery of the euro area). Why? What is the main essence of the Dutch disease that connects the above examples?
3. Can you name some of the countries that Azerbaijan should follow and which, on the contrary, not in the context of eliminating the adverse effects of the Dutch disease?
Why did you choose these countries that are (not)appropriate to follow?
ASSESSMENT:
Criterion Excellent Very good Good Insufficient
Aim formulation and fulfilment x
Work with literature x
Methods and data used x x
Results and their discussion x
Formal aspects x x
Suggested overall grading: 1 - Excellent
Prague, 15th May 2021 Ondřej Šíma Signature
