Concept note on e-Participation in the Republic of Azerbaijan

 

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Concept note on e-Participation in the Republic of Azerbaijan

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Concept note on e-Participation in the Republic of Azerbaijan

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“Our methods will include the development of science, education, innovative entrepreneurship, and growth of new technologies, as well as betterment of the business climate. ... There is work underway by the government to invest in the development of digital infrastructure -internet infrastructure, telecommunication, radio and television, data transmission networks, ... One of the biggest projects is the “E-Governance” project.350 out of 478 services, ... are available via the e-government portal, ... We are paying particular attention to enlargement of ICT deployment in education... the launch of our second telecommunications satellite is planned, ... Aztelecom have already concluded agreement with Kazakhtelecom regarding installation of the optic submarine cable. So, construction of the Trans-Eurasia Super Information highway can be started in order to provide you access to foreign markets with regional projects.” Ali Abbasov Minister of Communications and High Technologies Republic of Azerbaijan 1

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Contents 1 The United Nations has Recognized the Crucial Importance of e-Government & e-Participation Systems .................................................................................................................. 10 1.1 e-Government Systems Service a Variety of Needs ................................................................. 11 1.2 e-Participation is a Dynamic Subset of e-Government ............................................................. 12 Azerbaijan is Transforming into a Regional Innovation Center ..................................................... 12 2.1 Azerbaijan has generated robust growth in telecommunications. ............................................ 14 2.2 ... and has started an e-Government revolution ........................................................................ 17 2.2.1 Open Government Data is accellerating .......................................................................... 17 2.2.2 Access to government services has been growing . ......................................................... 18 2.2.3 Azerbaijan has taken regional leadership in use of e-Signatures .................................... 18 2.3 Azerbaijan’s Success is Based on Visionary Policy ................................................................. 19 How e-Participation in Azerbaijan Can Work ................................................................................ 20 3.1 Azerbaijan Can Pick & Choose the Most Appropriate Features in e-Participation .................. 21 3.2 Examples in Other Countries Illustrate the Flexibility & Utility Possible with e-Participation.................................................................................................................................. 24 3.2.1 The Partecipa.Net Project in Italy is Used to Link More Than 20 Local Governments.............................................................................................................................. 24 3.2.2 In Spain, e-Cognocracy & e-Democracy Have Aided in Finding Public Policy Solutions .......................................................................................................................... 24 3.2.3 In Europe, e-Participation Systems Were Used to Evaluate Approval of Genetically Modified Organisms (GMSs) ....................................................................... 26 3.2.4 In Austria, a Substantial Effort Was Made to Stimulate e-Participation Across All Sectors of Society, Including the Disabled ...................................................................... 26 3.2.5 In Switzerland, the “Comuno” e-Participation System Links Citizens to Social Networks .......................................................................................................................... 27 3.2.6 In Turkey, the Grand National Assembly Relies Extensively Upon e-Participation ...... 27 3.2.7 In Korea, e-Participation is Used to Set City Policies on Dozens of Issues .................... 28 3.2.8 In the United Kingdom, an e-Participation System Provides an Integrated Peer-toPatent Platform for the Legal Community ....................................................................... 29 3.3 A Critical Element of Success e-Participation is Active Stimulation of Citizen Participation .................................................................................................................................... 30 3.3.1 Across Europe, the Citizens’ Initiative (iECI) Experiment Has Shown the Importance of Top-Level Support for e-Participation to Succeed ................................... 30 3.3.2 In Spain, Analysis Indicates the Important Role of e-Participation in Bridging the “Digital Divide” ............................................................................................................... 32 3.3.3 In Korea, It Was Quickly Discovered that Successful e-Participation Relies Upon Effective Promotion to the Citizens ................................................................................. 34 3.3.4 In Norway, Research Uncovered the Crucial Role of Stake-holder Analysis in Designing e-Participation Systems .................................................................................. 35 3.3.5 Political Education is also Crucial in Stimulating e-Participation ................................... 36 3.3.6 Social Media Should Be a Priority for Stimulation of e-Participation ............................ 37 3.3.7 Research Also Shows that Implementation of e-Participation Rests Upon Selection of the Most Appropriate Tools ......................................................................... 37 3.3.8 Experts Agree that Participation of Youths Should be Encouraged ................................ 38 2 3 3

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3.3.9 Research has Identified A Number of Metrics to Evaluate e-Participation Systems ............................................................................................................................ 39 3.4 This Leads to a Number of Lessons Learned for Developing a National Action Plan for e-Participation in Azerbaijan .................................................................................................... 40 4 Action Plan To Build a World-Class E-Participation Platform in Azerbaijan (2015-2018) .......... 43 4.1 Successful e-Participation in Azerbaijan Will Depend Upon Enlightened Government Actions Across Several Dimensions ......................................................................................... 43 4.1.1 Azerbaijan Must Identify the Basic e-Participation Elements that Best Fit the Nation’s Culture................................................................................................................ 43 4.1.2 The Government of Azerbaijan Must Define Legislative Milestones that will Enable e-Participation to Work Smoothly ....................................................................... 46 4.1.3 Azerbaijan Should Use e-Participation as an Additional Tool to Stimulate Innovation ........................................................................................................................ 46 4.2 The National Plan will Have Three Major Phases, and a Preparatory Phase ........................... 49 4.2.1 The Preparatory Phase Will Focus on Obtaining a Mandate from Top Government Strategists and Officials ................................................................................................... 49 4.2.2 Phase I will Include Benchmarking and Gap Analysis at a High Level of Specificity ........................................................................................................................ 50 4.2.3 Phase II will Include Prioritization of Applications, Systems Analysis & Engineering Design ......................................................................................................... 52 4.2.4 Phase III will Encompass Roll-Out and a National Awareness Campaign to Stimulate Activity ............................................................................................................ 53 4.2.5 The Project Management Structure Will Ensure Integration of Citizen and Government Participation ................................................................................................ 54 4.2.6 The Use of Integrated Focus Groups will Serve as a Wellspring of Innovation ............. 56 4.2.7 At the Heart of the Planning is a Multi-Variate Screening Process to Pick the Best e-Participation Applications ............................................................................................ 58 4.2.8 The Government of Azerbaijan Should Consider Establishing a “Young Coders Program” .......................................................................................................................... 62 4.2.9 Information Centers Established in Government Buildings Such as Libraries Should be Evaluated to Reach Remote Villages ............................................................. 63 4.2.10 The Government of Azerbaijan Should Consider Launching a Number of Innovative “App-Labs” .................................................................................................... 63 4.2.11 It Might Be Useful To Rethink Traditional Methods and Consider a Program for “Pop-Up Labs ............................................................................................................. 64 4.3 The Budget Can Be Estimated in Person-Days ........................................................................ 66 The Government of Azerbaijan Must Overcome a Number of Factors that May Inhibit the Adoption of e-Participation ............................................................................................................ 68 5.1 Researchers Have Identified Many Inhibitors to e-Participation ............................................. 68 5.2 There is a Lack of Adequate Access to Internet-Enabled Devices ........................................... 71 5.3 Regional Disparities Perpetuate a “Digital Divide” Across Azerbaijan ................................... 72 5.4 Internet Access is Not Affordable for Many Citizens .............................................................. 73 5.5 Substantial Effort Must Be Made to Foster e-Skills in the Population ..................................... 73 5.6 University–Business Cooperation Needs to Improve ............................................................... 74 5.7 Institutional Reform and Bureaucratic Conservatism is Always a Difficult Challenge .................................................................................................................................. 74 5 4

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6 Annex — Five Case Studies ........................................................................................................... 76 6.1 Australia’s Experience with e-Participation in Parliament ....................................................... 76 6.2 Russia – Setting Principles for Successful e-Participation in the Eurasian Region ................. 78 6.3 Estonia – Using e-Participation in Lawmaking and Tenders for Public Transportation Contracts ................................................................................................. 80 6.3.1 e-Participation in Law-Making in Estonia ....................................................................... 80 6.3.2 Tender for services in public transportation .................................................................... 81 6.4 Germany – Participatory Budgeting in Cologne ...................................................................... 82 6.5 Turkey – two successful examples: BIMER and SIBIYO ....................................................... 84 6.5.1 BIMER ............................................................................................................................. 85 6.5.2 The Turkish SIBIYO system ........................................................................................... 86 6.5.3 Map of E-Participation Services in Turkey ..................................................................... 88 7 Annex–Suggested Technology Guidelines...................................................................................... 91 List of Tables 1 Critical ICT Programs of the Government of Azerbaijan ............................................................... 93 2 Compound Annual Growth Rate (CAGR) of Core Indicators of ICT Infrastructure in Azerbaijan 2005-13 ......................................................................................................................... 94 3 Compound Annual Growth Rate (CAGR) of Core Indicators of ICT Use in Enterprises in Azerbaijan 2005-13 ......................................................................................................................... 95 4 The Web Hosting Gap in Azerbaijan ............................................................................................... 96 5 Compound Annual Growth Rate (CAGR) of Core Indicators of Expenditures on Communications Services in Azerbaijan 1996-2013 ...................................................................... 97 6 Compound Annual Growth Rate (CAGR) of Macro Indicators of Expenditures of ICT 2003-13 in Azerbaijan ..................................................................................................................... 97 7 Compound Annual Growth Rate (CAGR) of Enterprise Employees Using ICT 2005-2013 .......... 98 8 Compound Annual Growth Rate (CAGR) of Use of Computers in Enterprises 2005-2013 ........... 99 9 There are at least eight different levels of e-Participation. .............................................................. 100 10 e-Participation Objectives & Tools Utilized in Sweden, The Netherlands, Denmark, Singapore, and the United Kingdom ............................................................................................... 101 11 e-Participation Tools & Technologies ............................................................................................. 102 12 Budget in Person-Days for e-Participation Project Including Planning and Focus Group Operations Phase ............................................................................................................................. 103 13 Budget in Person-Days for Each Focus Group Activity Covering Four Sectors ............................ 103 14 Budget in Person-Days for Planning & Preparation Prior to Commencement of Focus Group Activities (Phase II a,b) ................................................................................................................... 104 15 Budget in Person-Days for Benchmarking Prior to Commencement of Focus Group Activities .......................................................................................................................................... 104 16 Citizens in Australia Make a Number of Online Requests for Information .................................... 105 17 e-Government Initiatives in Turkey including UYAP, POLNET, MERSIS & KOBinet ............... 105 5

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List of Figures 1 e-Participation Can Be Developed Along a Range of Variations Balancing Citizen Participation and Government Control, but Azerbaijan Should Focus on the Informing, Consultation, and Partnership Strategies. Source: Based on models of Arnstein (1969), Susha and Gr¨onlund (2014), and Mahrer and Krimmer (2005). .................................................... 23 2 e-Participation is a Continual Process in Which Policy Agendas and Formulated, Reviewed, and Adjusted Based on Feedback From All Concerned Sectors of Society and the Government and Phases of Policy-Making Based on Phang and Kankanhalli (2008) .............. 36 3 The Essential Elements of a National e-Participation Strategy for Azerbaijan Must Balance Law, Security, Infrastructure, Human Resources, and Cultural Heritage ....................................... 44 4 The Government of Azerbaijan Has Numerous Policy Levers Available to Stimulate Innovation ........................................................................................................................................ 47 5 A National Policy for e-Participation Will Encompass the Government Sector, Private Business, and Citizens ..................................................................................................................... 48 6 The Action Plan for e-Participation Has Three Major Phases and a Preliminary Phase in Which the Basic Mandate is Obtained Government Strategists ...................................................... 54 7 The Project Structure for Identification and Selection of e-Participation Applications Relies on Executive Leadership, a Project Management Team and Operational Teams Working in Focus Groups ................................................................................................................................... 55 8 The Screening Process Used Utility, Technological Feasibility, Organizational Fit, and Government Vision as Key Criteria for Selecting e-Participation Applications ............................. 59 9 Gantt Table Showing Major Clusters of Activity for e-Participation Program ............................... 67 10 Azerbaijan’s balance of trade in ICT goods is generally negative, suggesting that industrial policy should focus on other areas such as Mobile app development where Azerbaijan can gain a competitive advantage............................................................................................................ 70 11 The Political Climate, Technological Challenges, and Expectations Management Form Three Classes of Inhibitors of e-Participation. ................................................................................ 71 12 Azerbaijan will make the fastest progress by focusing on adaptation of imported turn-key software to its needs, and by acceleration of innovation in development of Mobile Internet applications. ..................................................................................................................................... 90 6

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Concept note on e-Participation in the Republic of Azerbaijan The establishment of an e-Participation strategy by identification and screening of highly innovative ideas using government-private sector focus groups within the context of benchmarking of best practices and technologies from the international community. This strategy will place Azerbaijan in a leadership role for its region, help in the stimulation of innovation, and aid in creating viable institutions that will serve as a development platform in the future. Planned Activities a) Design of comprehensive e-Participation plan; b) Use of citizen-government focus groups for brainstorming and identification of most useful and innovative eParticipation projects; c) Systems analysis, design and systems engineering using rapid prototyping and daily code build techniques; d) Proliferation and utilization of real-time performance metrics and dashboards for continual evaluation; e) Raising government approval by the citizenry; and f) fostering increased trust in government. Start date: 06/01/2015 End date: 12/01/2015 Objective a) Establish Azerbaijan as a regional leader in innovation and e-Participation; b) roll out eParticipation applications that will improve productivity and trust in government; c) build institutions that will serve in the future as a platform for accelerated innovation and development; d) make it easier and faster for the government to deliver high-quality and needed services to the population and to business. a) Complete time schedule overall policy justification for e-Participation project; b) Initial estimates of timing and budget resources; c) Initial recommendations for government personnel; d) Obtain government approval for project and budget allocation. Identification of most feasible high-payoff sectors for e-Participation prototypes. Competitive analysis of e-Participation in neighboring countries. Establishing of benchmark metrics for evaluation of success of e-Participation project. Identification of priority sectors for citizen-government focus group activities. Formation of focus groups, and intensive identification of high utility potential e-Participation applications. Implementation of screening process that evaluates a) utility to citizens; b) technological feasibility; c) the challenges of organizational change in both government and the private sector; and d) compatibility with the strategic vision of the government. Continuous evaluation of sourcing options including application outsourcing, business process outsourcing, or private sector build of applications. Systems analysis, design and systems engineering. Rapid prototyping and daily build of code depositories. Continual human factors testing. National awareness campaign. Continual quality monitoring and use of real-time performance metrics. a) Legal regime for protection of IP; b) Investment directly in infrastructure; c) Funding of R&D; d) Industrial policy aimed at attracting ICT industry; e) Government procurement; f)International cooperation; g) e-Government. a) Coordinating ministry overseeing entire project; b) Relevant ministry where e-Participation application will be implemented; c) UNDP assisting in project architecture and management; d) Executive leadership team – jointly set up with UNDP/ministry staffing; e) The press (necessary for public awareness and recruitment of focus group members); f) Screening team, used to evaluate ideas gener ated from focus groups; g) Project management team, responsible for overall timing, documentation, and regular reporting to executive leadership team; h) Operational teams responsible for organizing and operating the focus groups. Mandate Benchmarking Design and Focus Activity Systems Engineering &Roll Out Policy Levers for Innovation Principal Actors in eParticipation Project 7

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Focus Groups a) Evaluation of e-Participation ideas brought in from outside of Azerbaijan to see how well they might fit; b) Invention of e-Participation ideas that help solve common problems faced by ordinary citizens; c) Creation of scenarios of how e-Participation might work in a variety of fields (transportation; education; planning; construction; food production, etc.); d) Assist government identification of most important issues facing the common citizen – issues that when solved will cause the greatest amount of satisfaction with government. a) Target engineering and computer science students; b) focus on mobile Internet applications; c) Official certificates given to creators of best apps; d) Apps chosen by public voting, similar to a TV game show with competition. a) Adopt experimental open laboratory focused on development of mobile Internet applications and services; b) “Up or Out” policy for innovators; c) Part-time advisory scientists available 24x7 for consultation and trouble-shooting; d) Strong emphasis on building espirit d’corps; e) Campus- like” environment; f) Use of non-traditional architecture to stimulate the experience; g) Weekly awards to teams showing most promising innovation; h) State support in filing patents and other IP protection; i) National weekly TV program where citizens can use SMS to vote on the most promising innovations. a) Spontaneous assembly of technology, ICT, managerial and design taken for a “crash” program; b) Non-permanent lab – use and then disassemble and throw away; c) Operate lab in a “virtual” mode; d) Quick set-up and tear-down of development teams; e) All infrastructure set up on temporary basis; f) Goal - capability to set up lab within 72 hours; g) Mandate to harness other national resources, equipment, personnel, as needed on short-term basis. a) Utility to citizens as determined first by brainstorming and focus group activity; b) Assessment of technological feasibility; c) Assessment of potential for outsourcing; d) Organizational feasibility (challenges of organizational change in the way government services are deployed); e) Consistency with overall government priorities and vision. Monitoring Methods Automated application utilization data. Monitoring of telecommunications traffic. Monitoring of data traffic from outside major cities. Cost benefit analysis of government activities using transaction cost and volume data. 2015-16 2016 2016 Evaluation Period Young Coders Program Development of App Labs Development of Pop Up Labs Screening Criteria Quality Indicators Citizen participation. Digital Divide Efficiency 8

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1 The United Nations has Recognized the Crucial Importance of e-Government & e-Participation Systems At United Nations Conference on Sustainable Development held in Rio de Janeiro in June 2012, a global consensus was reached that to achieve our sustainable development goals we need institutions at all levels that are effective, transparent, accountable and democratic. It also was concluded that egovernment systems are a vital strategy to achieve these objectives. “E-government holds tremendous potential to improve the way governments deliver public services and it also enhances broad stakeholder involvement in public service.”1 This short quote by the Under-Secretary General2 of the United Nations Department of Economic and Social Affairs (UNDESA) highlights the growing importance of e-Government and e-Participation over the past decade. Governments increasingly recognize these unique and powerful tools. eGovernment and e-Participation systems have improved the efficiency and effectiveness of public administration, and have driven a reexamination of how government works. In addition, they have started to revolutionize the relationship between government and its citizens and between government and business. One primary effect has been lowering of transactions costs for government to business (G2B) and government to citizen (G2C) transactions. This has become particularly important during the recent global financial crisis which still effects much of the world3, where budget deficits are 5%– 12% of GDP4 in many countries. In a price sensitive world, any lowering of transactions costs is welcome. Another issue in many countries is mustering the resources necessary to meet the demands for health care, better education, gender equality, preservation of the environment and maintenance of full employment as envisaged in the Millennium Development Goals (MDGs). Here, e-government and eParticipation services can play a major role in meeting these objectives, including poverty reduction and women empowerment. Nevertheless, the overall leverage which is inherent in the e-government revolution is the substantial improvement in delivery of government services. This improvement not only increases satisfaction of citizens and private sector businesses, but also makes the work of civil servants easier and less stressful. An additional factor is that given the generally inefficient nature of many government services, even modest investments in ICT can greatly improve efficiency5. 1.1 e-Government Systems Service a Variety of Needs e-Governance has been defined from a number of perspectives. For example, telecommunication experts would see e-government through the development of technical infrastructure, while computer specialists would rather focus on different standards and applications such as Java, the eXtensible Markup Language (XML), or the semantic web. A human rights activist could be more interested in UN e-Government Survey 2014: iii Mr. Hong Bo Wu 3 The United States no longer is in a crisis. As of the end of 2014 it has full employment and is now producing more petroleum than Saudi Arabia, thus changing the world’s energy balance. 4 See UN 2010: 43 5 In many sectors that are under-developed, the infusion of mobile Internet, for example, has increased productivity by 300%–450% in a short period of time. These large productivity improvements are generated because the system is starting from such a low level. 2 1 9

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the opportunities this approach provides for the freedom of expression and privacy or other relevant human rights6.6 The World Bank sees e-government as governmental use of information technologies that have the ability to transform relations with citizens, business, and other agencies of government.7 A more complete definition has been provided through a joint research initiative for global e-government conducted by the United Nations (UN) and the American Society for Public Administration (ASPA): “Broadly defined, e-government includes the use of all information and communication technologies, from fax machines to wireless palm pilots, to facilitate daily administration of government. However, like e-commerce, the popular interpretation of e-government is one that defines it exclusively as an Internet driven activity to which it may be added that improves citizen access to government information, services and expertise to ensure citizen participation in, and satisfaction with the government process. It is [characterized by a] permanent commitment by government to improving the relationship between private citizen and public through [by] enhanc[ing], cost-effective and efficient delivery of services, information and knowledge. It is the practical realization of the best that government has to offer8. This rather optimistic definition of E-Government is one of the reasons why hope remains high among the academic community that technology will allow enhancements in government services, transparency and accountability as well as providing meaningful opportunities for citizen participation9. 1.2 e-Participation is a Dynamic Subset of e-Government In brief, e-Participation is a subset of e-government. It refers primarily to any effort to engage citizens for the purpose of soliciting and utilizing their input. This might include activities such as the gathering of comments, hosting dialogues, holding electronic votes and building engaged citizen networks. It is generally thought that e-Participation offers a framework for taking advantage of many different types of engagement, from information to consultation and more intensively active participation.10 See Page 20 for an in-depth discussion of e-Participation. 2 Azerbaijan is Transforming into a Regional Innovation Center Early on, the Government of Azerbaijan recognized the crucial nature of ICT in facilitating economic development, and designated ICT as a priority sector for government attention.11 In particular, the National Information and Communication and Technologies Strategy for the Development of the Republic of Azerbaijan (2003-2012) set the basis for the accelerated development of ICT throughout the economy. Several components were essential for this strategy including a) liberalization of telecommunication markets and the creation of an innovation-oriented regulatory 6 7 See Kurbalija 2012: 1 See Bhuiyan 2010: 34 8 Ibid 9 See Ahn and Brettschneider 2010: 935 10 In this case active participation is defined by the scientist as “a relationship based on partnership with government in which citizens actively engage in defining the process and content of policy-making.” See Macintosh 2004:1 f. 11 See Gulmamedov (2009): “The state policy conducted in Azerbaijan provided suitable opportunity for the development of information-communications 10

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environment; b) further development of the telecommunications infrastructure; and c) roll-out of eGovernment12 services. Market liberalization has stimulated growth. There now are 4 mobile operators, 7 fixed-line operators, and 35 Internet providers. There has been a massive increase in utilization of communications and information technology.13 The Government of Azerbaijan has made extensive statistical measures of the nation’s progress in ICT.14 Table 2 on Page 94 shows that from 2005–2013, the Compound Annual Growth Rate15 (CAGR) for the percentage of Azerbaijan’s population living in areas covered by mobile cellular telephony is more than 99%. In the same period of time, the CAGR for the number of fixed main telephone lines technologies as a new priority field. Suitable geographical position of Azerbaijan and Trans-Asia-Europe (TAE) fiber-optic cable highway which crosses territory of the country enables the realization of the idea on creation of infrastructure which will render information service to the countries of the regions including commercial operations.” See also various speeches regarding overall ICT development in IEEE (2013) where per 100 citizens has been 83.4%. Table 3 on Page 95 shows similar data for the Azeri enterprise. Here in the 2005–2013 period, the use of extranets has a CAGR of 1,350.5% and the distribution of enterprises using ICT networks has a similar figure of 99.9%. ISDN use has grown at a rate of 150.9% in enterprises. Even use of DSL has growth rates of 24.5%–36.0%. Smartly, Table 5 on Page 97 shows that in sectors such as mining, construction, health, and transportation, use of externally hosted websites is 43.8%–61.9% of enterprises. This has been accomplished with only moderate increases in expenditures for important infrastructure items in the telecommunications sector. For example, Table 5 on Page 97 shows that from 1996–2013, the CAGR for expenditures on main telephone lines rose at a rate of only 21.2%. Expenditures on ICT in Azerbaijan show a pattern of strong growth. For example, in Table 6 on Page 97 we can see that the CAGR for the number of workers in the ICT sector for the 2003–2013 period is a stunning 33,305.4%. The Income from ICT services CAGR is 109.9%, and foreign investment inflows grew at a rate of 53.6%. Table 7 on Page 98 shows a similar growth pattern for the number of enterprise employees using ICT in their day-to-day work environment. Similarly, Table 8 on Page 99 shows that from 2005–2013, the number of employees using computers in enterprises has a CAGR of 27.9%. In addition, ten of the twenty top ICT companies worldwide have established a base in Azerbaijan. These include: a) Microsoft; b) Cisco Systems; c) Hewlett Packard; d) IBM; e) Apple Computer; f) Intel; g) Oracle; h) Google; i) Nokia-Siemens Networks; and j) Ericsson. In addition to marketing of their products, the facilities of each of these companies are involved in R&D activities in Azerbaijan. This is a tangible result of government ICT policies.16 See also Chantzi (2013). Aliguliyev/Gurbanov 2012: 150f. 14 See also Alguliyev and Aliyev (2013): “ in accordance with the requirements of the National Strategy for ICT (for years 2003-2012), significant results have been achieved in the development of e-government, formation of knowledge-based economy”. 15 The compound annual growth rate (CAGR) is a business and investing specific term for the geometric progression ratio that provides a constant rate of return over the time period. CAGR is often used to describe some element of the business, for example revenue, units delivered, registered users, etc. CAGR dampens the effect of volatility of periodic returns that can render arithmetic means irrelevant. It is particularly useful to compare growth rates from different data sets such as revenue growth of companies in the same industry. CAGR is given by CAGR(t0,tn) = tn −t0 −1 where V (t0) is the start value; V (tn) is the finish value, and tn − t0 isV (tn ) 16 Aliguliyev/Gurbanov 2012: 154). 13 12 11

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2.1 Azerbaijan has generated robust growth in telecommunications. More than 20 years ago, Azerbaijan created the annual BakuTel International Exhibition and Conference. More than 10,000 specialists attend the event each year, and BakuTel has become known as a hotspot for the regional IT industry, and as a venue for excellent networking opportunities between professionals. The 2013 BakuTel event hosted representatives from 36 different countries and a total of 306 exhibitors. The prominence of BakuTel was enhanced by the 7th Internet Governance Forum (IGF) which took place in Baku in 2012. Using the slogan “International Governance for Sustainable Human, Economic and Social Development”, the conference helped promote Azerbaijan in the ICT sector. In December, 2014, BakuTel celebrated its 20th anniversary. The ICT sector in Azerbaijan has an annual growth rate of 20-25%, and now is the fastest growing sector in the country. The data for 2013 is an indicator of the progress that has been made. The number of ATS units has risen to 1,613; the number of trunk calls has been reduced to 104,208; The number of main telephone lines has jumped to 1,470,438; the number of apartments with telephone lines has risen to 1,346,118; the number of telephone lines per 100 families has risen to 69; the level of information services in the economy has risen to 1,528,062 thousand manats; from 2009 to 2013 the percentage of fully digital broadcasting has risen from 5% to more than 97%; the number of mobile telephones per thousand persons has risen from 7,751 to 10,125; the rate of computer utilization has risen to 62% of the population, and the number of Internet users has reached more than 73% of the population.17 Seventy-three percent of the population uses the Internet and 55 percent has a registered broadband connection. Mobile phones are ubiquitous, with a penetration rate of 110 percent. Three major mobile phone operators are competing in a market that grew by 25 percent during 2014. Bakubased Azerfon, operating under its brand name Nar Mobile, has been the fastest growing company in the market, attracting more than two million subscribers since 2007. It has introduced 3G mobile technology, and now Azerbaijan Airlines is the first to allow use of handsets during flight. Another important development for Azerbaijan’s ICT infrastructure has been the advanced satellite program under the leadership of the state-owned Azercosmos, an open joint-stock company (OSJC). Azercosmos-1 is the region’s first communications satellite and its deployment immediately resulted in a vast improvement in the quality of television broadcasting. Based on this success, new plans are being drawn up to construct and launch a next-generation satellite. On 28th August 2013, the Ministry of Communication and High Technologies (MoCHT) and the U.S. Trade and Development Agency (USTDA) signed a grant agreement to fund a feasibility study on the Azerspace-2 communications satellite project. The study will cover technical, economic and financial issues of manufacturing and placing it into geostationary orbit.18 In another milestone, the Ministry of Communication and High Technologies (MoCHT) pioneered a Trans-Eurasian Information Super Highway initiative. This project envisions a transnational fiber optic backbone linking Western Europe to China through the Eurasian Connectivity Alliance19 (EurACA). Azerbaijan plans to take advantage of the strong demand for intra-Asian 17 Source: Ministry of Communications and High Technologies, http:// mincom.gov.az/charts-en-US/details/67 accessed 23 December 2014. 18 The feasibility study was completed by the contractor company in late June 2014 and results will be released soon. See other related information at Azerbaijan National Aerospace Agency Special Space Device Development Bureau http:// www.science. az/en/amaka/okb/index.htm and Institute for Space Informatics http://www.science.az/en/ amaka/informatika /index.htm. 19 The project is aimed at building a high capacity fiber-optic transit route Frankfurt-Hong Kong. TASIM project will benefit the global community by improving global internet connectivity and supporting integration of countries into the global economy. In December 2009,the 64 session of the UN General Assembly adopted Resolution on Transnational Eurasian Information Super Highway (A/res/64/186). Further, in December 2012, the 67 session of UN GA adopted Resolution on Building connectivity through the Trans-Eurasian Information Super Highway (A/C.2/67/L.35/Rev.1) with proposal to establish the Eurasian Connectivity Alliance with the ITU. See: project website at http://www.mincom.gov.az. 12

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bandwidth, which is expected to reach a CAGR of up to 65%. This is one of the highest growth rates in the world. The most recent plans call for a terrestrial cable of 6,270 kilometers linking 36 cities and more than 35 million persons. Further extensions will link 68 cities and up to 55 million persons. Finally, Azerbaijan is building a state-of-the-art telecommunications switching hub. This center is designed to provide Tier-3 Internet peering services. Combined with the aggressive laying of fiber optic cable throughout Azerbaijan, this new switching center will both increase connectivity internationally, and make it possible to provide a vast array of government benefits to the Azeri people, including e-Participation, e-Government services, online education, electronic commerce, low cost telephony, and a variety of other services. 2.2 . . . and has started an e-Government revolution This robust ICT infrastructure development not only boosted economic competitiveness, it also promoted the efficient provision online of government assistance related to education, health care and a variety of other social services. The following government initiatives have kick-started an eGovernment revolution: a) roll-out of a state registry for citizens; b) automation of migration services; c) e-services for taxpayers; d) electronic health-care services; e) online registration of new companies; f) introduction of “one-stop-shopping” for customs and international trade rules compliance; and g) development of an education management information system that allows online submission of applications for university admission. Out of 20 basic e-services defined by the European Union for citizens and business, 8 have already been brought online in Azerbaijan including electronic submission of tax and customs declarations and electronic submission of applications for university entrance exams. The number of these important applications continues to grow.20 2.2.1 Open Government Data is accellerating These applications derive their success in large part from the Open Government Data (OGD) Action Plan which was adopted in 2012. Open Data is a necessary enabler for a variety of government services. It provides a foundation that helps citizens better understand how their government works, how their tax money is spent, and how decisions and laws are made. An important step towards achieving the goals of the OGD national strategy were the Terms of Reference (ToR) for the e-Government Portal which were approved on February 5, 2013 by Presidential decree. Pursuant to the decree, a state program on e-Government services will be deployed between 2014-2016. Moreover, since January 2013, as many as 40 state agencies have joined the eGovernment Portal. The portal publishes a monthly bulletin and has taken up an initiative to provide access for all mobile devices, which are recognized as being the fastest growing sector for Internet access.21 These efforts are also reflected in the higher ranking for Azerbaijan in the United Nations eGovernment Survey.22 By 2014, Azerbaijan ranked 68th among 192 states, up from only 98 in the 2012 assessment. This is a faster rate of improvement than any other country. Azerbaijan now ranks 77th in terms of the e-Participation index among 157 participating countries. 20 21 Aliguliyev/Gurbanov 2012: 152f. Source: MoCHT Annual Report 2013:20 22 For further details regarding Azerbaijan’s e-government strategy, See Ibrahimov and Hajiyev (2004). 13

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2.2.2 Access to government services has been growing The number of citizens using e-Government services in Azerbaijan also has increased rapidly. According to the Data-Processing Center of MoCHT, by June 2014, as many as 799,944 citizens viewed the e-gov.az portal and made use of its services 1,385,054 times. Users spend an average time of 5 minutes or more using the portal. This proves that the portal operates well, and is efficient for citizens. Approximately 53.6% of users were visiting for the first time. Almost one-half of users are repeat customers, thus showing that the portal is attractive and useful enough to gain the trust of citizens. As of Fall 2013, more than 177,255 citizens have been given a personalized pass-code to access the website e-gov.az.23 2.2.3 Azerbaijan has taken regional leadership in use of e-Signatures Growth and innovation in electronic commerce has been enabled by the Center for National Certificate Services which was launched in 2011. This organization was designed to facilitate use of esignatures. In Azerbaijan, it is now possible for both mobile and desktop applications to use electronic signatures. In addition, e-Signature cards are being made available to any citizen who fills in an eapplication and pays online. As of 30 June 2014, more than 19,232 legal entities and citizens have used electronic signatures. Of those, 13,034 were submitted to state organizations, 1,004 to legal entities and 5,201 to fellow citizens.24 The result is that Azerbaijan has emerged as a regional leader in eSignature utilization. 2.3 Azerbaijan’s Success is Based on Visionary Policy The growth of innovation in ICT in Azerbaijan is not due to luck.25 Instead, it is the result of a long-range set of policy initiatives from the government. For example, during its more than 20 years of independence, the Republic of Azerbaijan has strengthened its position as a key oil and gas center. It has developed strong regional relationships and has wisely used the revenues to stimulate economic diversity across all sectors, including ICT.26 However, at the same time, government policy has resisted falling into the trap of relying on a single sector. Instead, economic diversification has been a major goal of national strategy since 1993. This policy involves a) maintaining prudent macroeconomic management; b) promoting trade policies and institutions; c) strengthening the country’s role as a regional transport corridor by improving the highway infrastructure throughout the country; and d) enhancing the business sector environment so as to stimulate high growth in non-oil sectors. The World Bank recently has recognized these efforts and ranks Azerbaijan reasonably well for its business environment. In addition, Azeri policy has long recognized that success in growing the economy rests in large part upon innovation in the ICT sector. Every sector of the economy must be able to take advantage of the most advanced ICT tools. This policy has been made possible by active and visionary leadership. Some of the most important government initiatives include: 23 24 This pass-code can be obtained by any citizen of the Republic of Azerbaijan who obtains an identity card. Source: ictnews.az — an important website which covers ICT developments in Azerbaijan. 25 Azerbaijan’s policies are stimulated by resolute leadership. See Swietochowski (1999). 26 Aliguliyev/Gurbanov 2012: 149f. 14

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