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Future of the Azerbaijani Defense Industry – Market Attractiveness, Competitive Landscape, and Forecasts to 2020

Future of the Azerbaijani Defense Industry – Market Attractiveness, Competitive Landscape, and Forecasts to 2020

Summary

The Azerbaijani defense and security budget registered a growth rate of 8.52% in the last five years and is estimated to grow at a CAGR of 8.41%, to value US$5.4 billion by 2020. This will be primarily driven by strong economic growth fuelled by robust energy exports and the country’s desire to invest significantly in enhancing its indigenous manufacturing capabilities.

Key Findings

Azerbaijani defense expenditure recorded a CAGR of 8.52% between 2011 and 2015, and valuesUS$3.9 billion in 2015

The country’s defense expenditure is expected to reach US$5.4 million by 2020, with a projected CAGR of 8.41% during the forecast period

The average share of capital expenditure is expected to be 43.3% over the forecast period, compared to an average share of 42.9% during 2011–2015

Over the forecast period, the country’s defense budget will be primarily directed at military imports and improving domestic production capabilities

The key areas of investment are expected to be aircraft, helicopter, and armored vehicles

Synopsis

Strategic Defense Intelligence’s Azerbaijani Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2020 report offers detailed analysis with market size forecasts for 2016–2020. The factors that influence demand, key market trends, and challenges faced by industry participants are also covered.

In particular, it provides an in-depth analysis of the following:

Defense industry market size from 2016–2020, including highlights of the demand drivers and growth stimulators. a snapshot of the country’s expenditure and modernization patterns are provided

Budget allocation and key challenges: insights into procurement schedules formulated within the country and a breakdown of the defense budget with respect to the army, navy, and air force. The key challenges faced by defense market participants within the country are also detailed

Porter’s five forces analysis: study the market characteristics by determining the bargaining power of suppliers, buyers, threat of substitution, intensity of rivalry, and barriers to entry

Import and export dynamics: review the prevalent trends in the country’s imports and exports over the last five years

Market opportunities: identify the top five defense investment opportunities from 2015 to 2025

Competitive landscape and strategic insights: including an overview of leading players, key alliances, strategic initiatives, and a brief financial analysis

Reasons To Buy

Identify and track the global defense market and make regional comparisons to effectively target new revenue streams

Understand the importance of being led by the defense ministries in the military procurement market and define your strategies with insight on what your customers really want by analyzing recent orders, technical specifications, and the country’s expected investment pattern during 2016–2020

Make correct business decisions based on a detailed analysis of the industry from 2016–2020, which includes a total competitive landscape of the sector with detailed profiles of the top domestic and foreign defense manufacturers along with information about their products, alliances, recent contract wins, and financial analysis

Determine prospective investment areas by gaining an in-depth understanding of the industry in terms of market opportunities

Channelize resources by identifying various military requirements that are expected to generate revenues across different sectors during 2016–2020


1 Introduction
1.1. What is this Report About?
1.2. Definitions
1.3. Summary Methodology
1.4. SDI Terrorism Index
1.5. About Strategic Defence Intelligence
2 Executive Summary
3 Market Attractiveness and Emerging Opportunities
3.1. Defense Market Size Historical and Forecast
3.1.1. Defense expenditure expected to cumulatively value US$23.5 billion over the forecast period
3.1.2. Perennial state of dispute with Armenia and military modernization are expected to be the key factors driving defense expenditure
3.1.3. Military expenditure growth is expected to be in tandem with economic growth
3.2. Analysis of Defense Budget Allocation
3.2.1. Capital expenditure is expected to grow at a CAGR of 8.72% over the forecast period
3.2.2. Per capita defense expenditure expected to increase over the forecast period
3.3. Homeland Security Market Size and Forecast
3.3.1. Protection of energy infrastructure and combating drug trafficking will be the key factors driving homeland security
3.3.2. Azerbaijan considered at ‘some risk’ of terrorist attack
3.4. Benchmarking with Key Global Markets
3.4.1. Azerbaijan to be among the fastest-growing defense spenders
3.4.2. Azerbaijan ranks among the top five leading military spenders in terms of defense expenditure as a percentage of GDP
3.4.3. Azerbaijan faces some risk of terror attacks
3.5. Market Opportunities: Key Trends and Drivers
3.5.1. Demand for Combat and Surveillance Helicopters to increase
3.5.2. Demand for armored vehicles to surge
3.5.3. Use of Helicopter Simulators and Training Helicopters is expected to rise
3.5.4. Communications and logistics systems to be enhanced to enable informed actions against attack
4 Defence Procurement Market Dynamics
4.1. Import Market Dynamics
4.1.1. Azerbaijan’s reliance on military imports is expected to decline over the forecast period
4.1.2. Azerbaijan imports the majority of its arms from Russia
4.1.3. Aircraft and armored vehicles are the dominant Azerbaijani defense imports
4.2. Export Market Dynamics
4.2.1. Azerbaijan’s defense exports are negligible and are expected to increase considerably over the forecast period
5 Industry Dynamics
5.1. Five Forces Analysis
5.1.1. Bargaining power of supplier: high
5.1.2. Bargaining power of buyer: low to medium
5.1.3. Barrier to entry: high to medium
5.1.4. Intensity of rivalry: low to medium
5.1.5. Threat of substitution: low
6 Market Entry Strategy
6.1. Market Regulation
6.1.1. Azerbaijan’s foreign investment policy prohibits FDI in the defense sector
6.2. Market Entry Route
6.2.1. Government-to-government deals form an attractive entry route for foreign manufacturers
6.3. Key Challenges
6.3.1. Corruption reduces transparency in defense deals
6.3.2. Arms embargo imposed by OSCE
7 Competitive Landscape and Strategic Insights
7.1. Competitive Landscape Overview
7.1.1. The majority of defense equipment in Azerbaijan is supplied by foreign manufacturers
7.2. Key Foreign Companies
7.2.1. Uralvagonzavod – overview
7.2.2. Uralvagonzavod – major products and services
7.2.3. Uralvagonzavod – recent announcements and strategic initiatives
7.2.4. Uralvagonzavod – alliances
7.2.5. V.A. Degtyarev Plant – overview
7.2.6. V.A. Degtyarev Plant – major products and services
8 Business Environment and Country Risk
8.1. Demographics & Social Statistics
8.1.1. Population – Rural
8.1.2. Population - Urban
8.1.3. Population – Number of Households
8.2. Economic Performance
8.2.1. GDP per Capita
8.2.2. Gross Domestic Product
8.2.3. Gross National Disposable Income
8.2.4. Manufacturing Output
8.2.5. Consumer Price Index
8.2.6. LCU per US$ (period average)
8.2.7. LCU per Euro (period average)
8.2.8. Lending Rate
8.2.9. Deposit Rate
8.2.10. Real Interest Rate
8.2.11. Goods Exports as a % of GDP
8.2.12. Goods Imports as a % of GDP
8.2.13. Goods Trade Surplus/Deficit as a % of GDP
8.2.14. Services Imports as a % of GDP
8.2.15. Services Exports as a % of GDP
8.2.16. Services Trade Surplus/Deficit as a % of GDP
8.2.17. Net Foreign Direct Investment
8.2.18. Net Foreign Direct Investment as % of GDP
8.2.19. International reserves, including gold
8.3. Energy and Utilities
8.3.1. Total Conventional Thermal Electricity Net Generation
8.3.2. Hydroelectricity Net Generation (Billion Kilowatt hours)
8.3.3. Total Conventional Thermal Electricity Installed Capacity
8.3.4. Total Electricity Exports (Billion Kilowatt hours)
8.3.5. Total Electricity Imports (Billion Kilowatt hours)
8.3.6. Proved Reserves of Natural Gas
8.3.7. Total Petroleum Consumption
8.3.8. Crude Oil Proved Reserves
8.4. Minerals
8.4.1. Mining, Manufacturing, Utilities Output
8.5. Technology
8.5.1. Research and development expenditure
8.5.2. Patents Granted
8.6. Telecommunication
8.6.1. Telephone Lines
8.6.2. Telephone lines Penetration Rate
9 Appendix
9.1. About SDI
9.2. Disclaimer
List of Tables
Table 1: Azerbaijani Defense Expenditure (US$ Billion), 2011–2015
Table 2: Azerbaijani Defense Expenditure (US$ Billion), 2016–2020
Table 3: Azerbaijani Defense Expenditure (ANZ Billion), 2011–2015
Table 4: Azerbaijani Defense Expenditure (AZN Billion), 2016–2020
Table 5: Azerbaijani GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth, 2011–2015
Table 6: Azerbaijani GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth, 2016–2020
Table 7: Azerbaijani Defense Budget Split Between Capital and Revenue Expenditure (%), 2011–2015
Table 8: Azerbaijani Defense Budget Split Between Capital and Revenue Expenditure (%), 2016–2020
Table 9: Azerbaijani Per Capita Defense Expenditure (US$), 2011–2015
Table 10: Azerbaijani Per Capita Defense Expenditure (US$), 2016–2020
Table 11: Benchmarking with Key Markets – 2011–2015 vs. 2016–2020
Table 12: SDI Terrorism Index
Table 13: Uralvagonzavod – Major Products & Services
Table 14: Uralvagonzavod – Alliances
Table 15: V.A. Degtyarev Plant – Major Products & Services
List of Figures
Figure 1: Azerbaijani Defense Expenditure (US$ Billion), 2011–2015
Figure 2: Azerbaijani Defense Expenditure (US$ Billion), 2016–2020
Figure 3: Azerbaijani Defense Expenditure (AZN Billion), 2011–2015
Figure 4: Azerbaijani Defense Expenditure (AZN Billion), 2016–2020
Figure 5: Azerbaijani GDP Growth vs. Defense Expenditure Growth and Defense Expenditures Percentage of GDP Growth, 2011–2015
Figure 6: Azerbaijani GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth, 2016–2020
Figure 7: Azerbaijani Defense Budget Split Between Capital and Revenue Expenditure (%), 2011–2015
Figure 8: Azerbaijani Defense Budget Split Between Capital and Revenue Expenditure (%), 2016–2020
Figure 9: Azerbaijani Per Capita Defense Expenditure (US$), 2011–2015
Figure 10: Azerbaijani Per Capita Defense Expenditure (US$), 2016–2020
Figure 11: SDI Terrorism Heat Map, 2015
Figure 12: SDI Terrorism Index, 2015
Figure 13: Benchmarking with Key Markets – 2011–2015 vs. 2016–2020
Figure 14: Benchmarking with World’s Largest Defense Spenders (US$ Billion), 2015 and 2020
Figure 15: Benchmarking with Large Defense Spenders as % of GDP, 2015
Figure 16: Azerbaijani Defense Import Trend, 2010–2014 (TIV values)
Figure 17: Azerbaijani Defense Imports by Country (%), 2010–2014
Figure 18: Azerbaijani Defense Imports by Weapon Category (%), 2010–2014
Figure 19: Industry Dynamics – Porter’s Five Forces Analysis
Figure 20: Azerbaijani Population – Rural (In Millions), 2014–2023
Figure 21: Azerbaijani Population – Urban (In Millions), 2014–2023
Figure 22: Azerbaijani Population – Number of Households (In Millions), 2008–2017
Figure 23: Azerbaijani GDP per Capita (US$), 2013–2022
Figure 24: Azerbaijani GDP (current US$ bn), 2014–2023
Figure 25: Azerbaijani Gross National disposable income (US$ Bn), 2002–2011
Figure 26: Azerbaijani Manufacturing Output (US$ Bn), 2002–2011
Figure 27: Azerbaijani Consumer Price Index, 2014–2023
Figure 28: Azerbaijani LCU per US$, 2014–2023
Figure 29: Azerbaijani LCU per Euro, 2010–2019
Figure 30: Azerbaijani Lending Rate (%), 2003–2012
Figure 31: Deposit Rate (%), 2003–2012
Figure 32: Azerbaijani Real Interest Rate (%), 2003–2012
Figure 33: Azerbaijani Goods Exports as a % of GDP, 2002–2011
Figure 34: Azerbaijani Goods Imports as a % of GDP, 2002–2011
Figure 35: Azerbaijani Goods Trade Surplus/Deficit as a % of GDP, 2002–2011
Figure 36: Azerbaijani Services Imports as a % of GDP, 2002–2011
Figure 37: Azerbaijani Services Exports as a % of GDP, 2002–2011
Figure 38: Azerbaijani Services Trade Surplus/Deficit as a % of GDP, 2002–2011
Figure 39: Azerbaijani Net Foreign Direct Investment (US$ Bn), 2002–2011
Figure 40: Azerbaijani Net Foreign Direct Investment as % of GDP, 2002–2011
Figure 41: Azerbaijani International reserves, including gold (US$ Bn), 2002–2011
Figure 42: Azerbaijani Total Conventional Thermal Electricity net Generation (Bn Kilowatt Hours), 2002–2011
Figure 43: Azerbaijani Hydroelectricity Net Generation (Billion Kilowatt hours), 2002–2011
Figure 44: Azerbaijani Total Conventional Thermal Electricity Installed Capacity (Million Kilowatts), 2001–2010
Figure 45: Azerbaijani Total Electricity Exports (Billion Kilowatt hours), 2001–2010
Figure 46: Azerbaijani Total Electricity Imports (Billion Kilowatt hours), 2001–2010
Figure 47: Azerbaijani Proved Reserves of Natural Gas (Trillion Cubic Feet), 2004–2013
Figure 48: Total Petroleum Consumption (Thousand Barrels per Day), 2003–2012
Figure 49: Azerbaijani Crude Oil Proved Reserves (Bn Barrels), 2004–2013
Figure 50: Mining, Manufacturing, Utilities Output (in Billions), 2002–2011
Figure 51: Research and development expenditure (In Mn), 2003–2009
Figure 52: Patents Granted, 2003–2012
Figure 53: Azerbaijani Telephone Lines (in Millions), 2003–2012
Figure 54: Azerbaijani Telephone lines Penetration Rate (per 100 people), 2003–2012

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