Azerbaijani Engineers in the Global Economy: Transnational Professionals Versus “Button-Pushers”

Introduction

For Azerbaijani engineers, the opening of Azerbaijan’s oil industry to foreign investment in the post-Soviet period held out great promise of development and prosperity. Both professionals working in the industry and the general public saw this as an opportunity to modernize the sector which had been in stagnation, if not outright decline, for decades. The revival of the oil industry and the trickle-down effect it was expected to have on other sectors of the economy were seen as a kind of antidote to the country’s late Soviet and early post-Soviet industrial decline. For local engineers, the expected oil boom held out the promise of more and better work, both in terms of employment opportunities and the content of their work.

Yet the effects of the country’s oil boom turned out to be quite different. The inflow of foreign capital and the revival of oil production did not stop deindustrialization in other sectors of the economy. On the contrary, the manufacturing sector, which was previously tightly integrated into Soviet industrial networks, has declined (Gill, Izvorski, Van Eeghen & De Rosa, 2014, pp. 148–153; International Monetary Fund [IMF], 2000, p. 57). ¹ Although the oil industry has become the dominant sector in terms of GDP (51% in 2010), it has provided less than 2 percent of total employment (Önder, 2012, p. 26). Instead of growth and expansion, local engineers have seen their employment opportunities reduced. But the impact of this country’s opening to the world has been more complex and nuanced than changes in the employment structure. In addition to reshaping the structure of economy, the entry of foreign actors has led to the “deep transformation of the local way to do business itself” (Fourcade, 2006, p. 150). Foreign investors have brought with them technology, equipment, and international standards, which led to the piecemeal replacement of Soviet standards and technologies with international ones. They also have brought foreign-trained engineers, reshaped the labor market and the professional jurisdictions of the country’s local engineers, and created new social inequalities. The integration of Azerbaijan into the global economy has created opportunities for international mobility for some Azerbaijani engineers. Revenues from the oil exports have also made it possible to import foreign technologies and reequip those few industrial facilities that have survived the transition or are being newly developed, such as in electricity production and the construction industry.

This article explores some of the changes initiated by the opening of Azerbaijan’s economy to foreign investment in the 1990s. The first international contract that facilitated the entry of multinational companies into Azerbaijan was signed in September 1994. Now widely known in Azerbaijan as “the Contract of the Century,” this Production Sharing Agreement (PSA) was made between the State Oil Company of the Azerbaijan Republic (SOCAR) and 10 international oil companies for the exploration and development of a large offshore oilfield called Azeri-Chirag-Guneshli (Bayulgen, 2003; Mustafayev, 2015; Polukhov, 1997; Spatharou, 2001). ¹ To date, PSAs have remained the main form of international involvement in Azerbaijan’s oil industry: between 1994 and 2010, 32 agreements were signed between SOCAR and various foreign partners (Ciarreta & Nasirov, 2012). As a result of these investments, the oil and gas industry has become the dominant sector of the economy in post-Soviet Azerbaijan. The country’s non-oil sectors have received far less foreign investment and remain less integrated into the global economy. According to some estimates, the FDI in non-oil sector accounted for as little as 12 percent of the total FDI between 1993 and 2010 (Hübner, 2011).

Much has been written about the impact of foreign investment and the ensuing oil boom on Azerbaijan’s economy and its political system (Bayulgen, 2003, 2005, 2010; Heradstveit, 2001, Ciarreta & Nasirov, 2012; Guliyev, 2013; Hoffman, 1999; Kaldor, 2007; Luong & Weinthal, 2001; O’Lear, 2007; Polukhov, 1997; Spatharou, 2001). Yet this research has mostly focused on macro-level changes. In contrast, this article focuses on micro-level changes, particularly on the career trajectories and work life of the country’s engineers. By exploring the engineers’ views on the impact of post-Soviet integration into the global economy, we show how foreign investment in the oil industry has opened the door to new inequalities and stratification within the engineering profession, while simultaneously changing the scope of the engineers’ work. Comparing the experiences and perceptions of engineers in the oil and gas industry with those in other industries, we suggest that the integration into global economy has been beneficial to many individual engineers, but has not led to the development of a strong professional community capable of collectively defending its professional interests.

Although multinational companies have long been recognized as the key agents of globalization (Dicken, 2011), their impact on professions has not attracted much scholarly attention until very recently. Traditionally, the sociology of professions has focused on national analysis and tended to overlook transnational processes and conditions (Evetts, 2008, p. 525; Faulconbridge & Muzio, 2012). As employers of professionals, multinational corporations play an important role in creating inter- national demand for certain professional skills and credentials, as well as the development of transnational labor markets (Allsop et al., 2009). However, their influence stretches beyond these areas; companies which work globally “employ locally qualified and regulated professionals in every market they operate in but ask these professionals to adopt global standards of professional practice” (Faulconbridge & Muzio, 2012, p. 143). Through this process, they influence the content of professional work and promote the universalization of practices that have been established most often in a Western, particularly Anglo-Saxon, context.

The existing research on the globalization of professions has been focused mostly on global professional service firms (GPSFs), particularly those working in law and accounting/auditing (Ballakrishnen, 2012, Faulconbridge & Muzio, 2012, Mennicken, 2008, 2010). Although engineering has long been considered one of the most international and globalized professions due to its relatively standardized knowledge base and international labor market, it has received relatively little attention in the literature (Allsop et al. 2009; Fernandez-Stark, Bamber & Gereffi, 2010). There also has been a noted “chronic shortage of research” on professionals in emerging markets, including those in post-socialist countries (Brock, 2016, p. 460). Like elsewhere, the existing literature on the role of multinational companies in the post-Soviet countries has also focused on law and accounting/auditing (Alon & Dwyre, 2011; Mennicken, 2010). The lack of attention given to the engineering profession in post-Soviet contexts is surprising, considering the important role of multinational companies working in the oil and gas industry in several post-Soviet countries, including Russia, Kazakhstan, and Azerbaijan.

Engineers are an interesting professional group to study because of their special place in Soviet, and more generally, state socialist modernization projects (Bailes, 1978; Balzer, 1990; Fitzpatrick, 2002; Kennedy & Sadkowski, 1991). Due to the importance of industrialization in the Soviet variant of modernization, engineers assumed a key modernizing role, personifying and promoting values of scientific rationality and progress (Kennedy & Sadkowski, 1991). The Soviet Union and other socialist states invested heavily in the development of their engineering professions, and they became one of the largest professions, with their political role comparable to that of lawyers in the USA (Balzer, 1990). However, by the late Soviet period this policy led to the overproduction of engineers, most of whom worked in routine, clerical jobs far removed from the heroic imagery of early industrialization engineering efforts (Gloeckner, 1991; Kryshtanovskaya, 1989). At the same time, Soviet engineering remained relatively isolated due to autarkic economic policies during the Soviet period and they had limited access to the technologies developed in the advanced capitalist countries. Thus, although engineers in capitalist countries have experienced transnational and globalizing processes for sometime, the engineering profession on the Eastern side of the Iron Curtain remained relatively disconnected from these processes. ² The opening of the post-Soviet economies to foreign investment in the 1990s thus had a strong impact on this profession.

This article is based on qualitative research involving 41 in-depth interviews (38 in Azerbaijan and 3 in Houston, TX, USA). Our respondents have had work experience in oil-related industries, including oil production, refining, and the manufacturing of oilfield equipment. Eighteen of the respondents have had international experience, while 10 worked in multinational corporations in Azerbaijan.

In the next section, this article uses the data obtained from these in-depth interviews to examine the impact of the transnationalization of Azerbaijan’s oil and gas industry on the Azerbaijani engineers working in this sector of the economy. We then turn to the perceptions of engineers in the non-oil sectors. The article concludes with a discussion of the main processes contributing to the changes in the professional domain of Azerbaijani engineers, and identifies some likely future developments.

Multinational Oil and Gas Companies as Employers of Engineers

The first negotiations with Western oil companies were in fact begun before the dissolution of the Soviet Union, in 1989 in Moscow, yet these talks were never finalized (Spatharou, 2001). The negotiations were continued by the first post-Soviet President, Abulfez Elchibey, who prioritized foreign investment in Azerbaijan’s oil industry which he saw as the only guarantee of Azerbaijan’s economic and, ultimately, political independence from Russia (Altstadt, 1997; Ergun, 2010, pp. 73–74). A preliminary agreement with British Petroleum (BP) ³ was reached in the spring of 1993; however, President Elchibey was brought down in June 1993 just weeks before the expected signing of the agreement (Altstadt, 2003; Spatharou, 2001, p. 35). Heydar Aliyev, the former First Secretary of the Communist Party of Azerbaijan (between 1969 and 1982) came to power then. He declared the need to renegotiate the proposed contract, and the first PSA was signed in 1994. Under that agreement, which was the first large scale investment in Azerbaijan’s oil industry, 10 multinational oil companies entered Azerbaijan.

A PSA is a mechanism characteristic of foreign investments in extractive industries and was first developed in the 1960s. It involves an agreement between an international operating company (a contractor) and a host government, often represented by a national, state-owned oil and gas company, SOCAR in Azerbaijan’s case (Babayeva, 2016; Bayulgen, 2003; Bindemann, 1999, pp. 211–212; Mustafayev, 2015). Under these agreements, the contractor or operating company bears all the costs of exploration and production in the contract site, and the profits are shared by the operating company with the host government. The PSAs usually operate under specially designed legal and tax regimes. In Azerbaijan, PSAs are also ratified by the parliament: they therefore assume the force of law, second in importance only to the constitu- tion itself (Mustafayev, 2015). They are thus supposedly insulated from changes in the legislative and political environment. While this step was justified in 1994 by the need to protect “The Contract of the Century” from political instability, it has effectively put the operations of such companies outside of the reach of local legislation (Bayulgen, 2003, pp. 211–212).

In addition to the companies participating in these PSAs, many engineering service firms also began operating in Azerbaijan following the start of the first PSA projects. Oil companies generally outsource much of their engineering, design, drilling, and other field activities to professional service companies (subcontractors). ⁴ Many of these service companies are also multinational and provide a range of technical solutions to different projects across the globe. Unlike operating companies, which, if their exploration is successful, operate for 25–30 years extracting oil and gas, such engineering services companies work under shorter-term subcontracts; at the same time, they can be working on a number of different projects, servicing both foreign and local oil companies. Finally, SOCAR has also established a number of joint venture (JV) companies with foreign partners, which provide various services, such as construction, drilling, tools, maintenance, and so on (SOCAR Website).

The PSA agreements provided an opportunity to work in multinational companies for local engineers; however, this has been rather restricted, especially in the early years of operations. Among other conditions, PSA agreements contain provisions for the employment of local personnel in the operating companies. ⁵ Thus, according to the first PSA for the Azeri-Chirag-Guneshli field, which has provided a model for subsequent agreements, the operating company is required “to give preference, as far as is consistent with efficient operations, to employing citizens of the Azerbaijan Republic in the performance of Petroleum Operations to the extent reasonably practicable, provided that such citizens have the required knowledge, qualifications and experience” (Agreement, 1994, Article 6). In this PSA, as well as the PSA for the development of the Shah Deniz field, the share of local professionals was established at 30–50 percent at the beginning of the operations (and 70% for non-professional staff) (Agreement, 1994, article 6; see also O’Lear, 2007, p. 215). Thus, in the beginning of operations of multinational companies in the oil industry of Azerbaijan, the majority of professionals, including engineers, were foreigners. The operational companies also employed contractors in which the proportion of local to foreign staff was not strictly regulated by the PSAs.

For Azerbaijani engineers, getting a job in a foreign company was not an easy task. According to our respondents who held senior managerial positions in multinational corporations working in Azerbaijan, these companies made a strategic decision to target only senior professionals at the managerial level, who had a command of English. Employing local senior managers is a common practice for multinationals operating in the developing world, as they seek connections with the higher ranks of the state bureaucracies, which these senior professionals and managers often possess (Liu, 2013). However, the English language requirement, which formally was not stipulated in the PSAs, was de-facto included in the definition of “the required knowledge, qualification and experience” necessary for employment. In the context of early post-Soviet Azerbaijan, this requirement meant that the group of engineers targeted for employment was extremely narrow, and only included those who had previous experience abroad, that is, often through technology acquisition programs. According to Javid, ⁶ one of such senior professionals, the management explicitly decided not to recruit mid-career professionals, as they would require considerable retraining. However, this retraining did not concern technical skills so much. More important were economic thinking and workplace culture which were significantly different among foreign and Soviet engineers. For Azerbaijani engineers, it was difficult to think in terms of cost-saving; and their workplace culture had been more hierarchical than that of the multinational corporations. ⁷

At the same time, the inflow of foreign engineers in Azerbaijan received mixed reactions from local professionals. The skills and expertise they brought with them were often highly specialized and not available in Azerbaijan; local engineers recognized that. But, this inflow created new inequalities that were not experienced during the Soviet period, as the expatriates received much higher compensation than the local engineers who were employed in the same company. This was especially obvious in the early years of operations, when foreign engineers received “internationally competitive salaries,” plus expat- riate packages covering relocation costs, renting of apartments, and so on. During the same period, the salaries of local personnel were very high by Azerbaijani standards, but meager compared to that of the expatriates. Expatriates’ salaries were 200–300 percent higher, not considering the relocation package. ⁸

Beyond the difference in income, the hierarchical relationship between Azerbaijani and foreign engineers was often met with considerable resentment. Azerbaijani engineers, who took pride in their long tradition of oil production, resented being subordinated to expatriates who now taught them how to do their work. Nadir, a former designer of oil field equipment, expressed this resentment in the following way:

I had seen people in the oil fields who could understand what was going on 1000 meters under the ground from the sound of the engine, seriously. And now the English come and teach these people to do something.

Less emotional, but still critical, accounts pointed out that foreign companies ineffectively used the existing pool of local expertise, with its deep knowledge of specifics of the Caspian oil shelf. Another senior professional explained this ineffectiveness with the particularities of PSA contracts, which includes complete recovery of their costs by the operating companies. According to this respondent, the operating companies thus had no interest in employing cheaper, even if more experienced local engineers; instead they preferred to hire much more expensive foreign engineers.

Yet the provisions for progressive increase in the share of local professionals made it impossible in the long term to rely on a few local senior managers with international experience. The ambitious targets of 90 percent of professional staff in the context of expanding operations meant creating many employment opportunities for Azerbaijani engineers. To fulfill these targets, multinational companies focused on hiring and training young engineering graduates rather than on incorporating mid-career professionals. For young engineers seeking work in multinational companies, the command of English and international experience were important assets in gaining employment in the multinational companies. According to two of our younger respondents, in the early 2000s, having educational experience at an American university could get you a job at an international company in Baku within a month (Yashar, chemical engineer, and Anar, industrial engineer, interviews). Significantly, it was not a degree from an American university that was crucial but rather some experience at an American university. Thus, Anar himself only completed one year of a two-year-long graduate program at an American university before being offered employment. Yet, the multinational oil company whose offer he eventually took persuaded him that it would be enough for his future career, as they would provide him with enough in-house training opportunities to compensate for not completing a degree.

For those who had no experience abroad and still wanted to work in foreign companies, the entry was considerably more difficult, although not completely closed. While getting an engineering position from the start was near to impossible, working one’s way up from a non-professional position towards a professional one was practiced. Along the way, such engineers could improve their English skills, make use of available in-house training opportunities, and sometimes even convert their qualifications to internationally recognized ones.

However, the number of engineers with Western, mostly American educational experience and/or those working their way up in the companies’ structures remained small and could not satisfy the growing demand for professionals as the operations expanded. One solution, favored by larger companies, has been to target students rather than graduates, through specialized scholarship and recruitment programs (see also Azimli, 2016). Typically, such programs, which begin roughly during the third year of studies, involve introductory orientations, and competitions with various awards, including scholarships, summer internships and part-time work opportunities, all ultimately leading to full-time employment for those who successfully complete previous stages of the program. This way, a student can be familiarized with working practices of the firm and trained in corporate culture prior to being employed. Such recruitment programs in Azerbaijan target students of oil-related departments of the State Oil Academy, as well as two private universities with engineering departments. In addition, there are also recruitment programs targeting Azerbaijani students in Turkey, which is a country with a large Azerbaijani student population. Interestingly, although English skills are now much more widespread than in 1990s, the English language requirement, which used to serve as a barrier for entry of engineers in 1990s, has been relaxed, and incoming engineers are now trained by the companies in English in addition to technical skills.

Despite these problems and other perceived injustices, employment in multinational companies has been widely preferred by local engineers. In addition to much better compensation in comparison to local companies, one of the reasons why Azerbaijani engineers prefer employment in multinational companies has been the opportunity for international mobility. After 2–3 years of work and training, engineers become internationally employable, and many of them choose to leave Azerbaijan. The volume of such circulation is quite high, upto 70–80 percent of all incoming engineers, according to our respondents. This has created a constant problem of recruitment for the management of the multi- nationals operating in Baku.

For those engineers who seek international careers after working in multinationals in Baku, there are two viable options. One, more secure, but also more difficult to achieve, is the option of being seconded (stationed) abroad by their employer. This option usually becomes available after some years of service to the company and demonstrated achievements on behalf of the engineers. Although engineers are expected to return to Azerbaijan upon completion of their secondment (assignment overseas), in practice, many choose not to return. This, for example, has been the case of Anar. After completing his assignment to the USA, having made use of training opportunities and receiving awards for his performance, he could literally “go across the street” from the office of his company in Houston and a get a job anywhere in the world where oil is produced. His company therefore decided to allow him to stay in the USA rather than make him return to Azerbaijan. He acquired US citizenship, and was pursuing a global career path—and at the time of the interview he was preparing to move from the USA to the UK, to work on a project in North Africa. Another option is independent job searching. Here, different strategies are used by engineers: some move abroad through programs of high-skilled migration, and look for work upon arriving. Others are recruited for work abroad, primarily in Russia and Middle East, by international headhunting agencies or oilfield service companies.

There are several reasons why engineers choose to leave Azerbaijan. In financial terms, although the salaries offered by multinational companies in Azerbaijan are highly competitive by local standards, engineers can make much more money abroad. According to Elmira (drilling engineer), the distinction between “national” and “expatriate” personnel is important in these decisions. By going abroad, Azerbaijani engineers themselves become expatriates, and can receive higher incomes than in Azerbaijan. Another set of reasons include quality of life considerations beyond income; for mid-career professionals with families, the future of their children and in particular education opportunities are an important concern. Answering a question about whether he would consider returning to Azerbaijan, Yashar explained:

The most important issue is the issue of school for the children. That’s it. Everything else is secondary. […] Education for children is the most acute question, because schools are terrible there [in Azerbaijan—authors]. And more or less normal schools, they cost a lot.

Related to this are their concerns about the future of Azerbaijan, corruption, the political environment, and lack of economic policies to tackle what some economists call the problem of Dutch Disease (Zohrab, quality engineer).

The remaining reasons have to do with the professional opportunities available in Azerbaijan and abroad. Azerbaijan’s location in the global oil industry production networks means that multinational companies are only present in the upstream phases of the global production network—exploration and extraction (Bridge, 2008). Value-adding and knowledge-intensive activities, such as processing, refining, project design and oil and gas research are generally carried out elsewhere. Thus, those engineers who would like to move out of operations and work in fields such as research and design have to leave Azerbaijan:

The most important thing in engineering is that, besides operational work you have to gain some exposure in the project design part of it. It is important that project design and operational side, you get exposure to both of them. […] At the moment what XY company does there is some operational activities, […] but design is generally outside Azerbaijan, it is in UK, America or other countries. So my next career step is probably moving to [another] project as an electrical engineer, so I will have exposure to design. (Shahin, electrical engineer).

It is interesting to note that all of the internationally successful engineers we interviewed have formal engineering degrees only from Azerbaijan. It is the on-the-job training provided by their companies and actual work experience that propel them into international careers, rather than the international reputation of their alma mater. This is illustrated by the case of Yashar, a chemical engineer with a few years of work experience at a multinational company in Baku, who had been working for the last 4 years in the USA. When asked if he felt that his basic education from the State Oil Academy of Azerbaijan was sufficient for the work he did in these companies, he gave the following explanation:

Yes, more than enough … and when I started to work as an engineer in 2006, the situation in [the company] was like this: there were virtually no people who studied engineering in the West. Mostly, engineers were more mature people, who graduated long before, and came to [the company] from, let’s say State Oil company and so on. So they were experienced. There were very few young people, and they were all very new, just graduated, from AZI [an informal acronym used for State Oil Academy—authors], went through some trainings and so on. And my education was completely enough, and I even easily communicated with those experienced people from SOCAR, professionally, I mean. So I never felt that I was behind in something. And even here, in America, I also feel that this is quite sufficient. […] Of course, some things get forgotten, but it is enough to just open a book and read again, I mean, basic principles… I mean, everybody forgets formulas, but basic principles, the understanding how things work, how processes operate—this is quite enough.

The experiences of internationally mobile engineers suggest that multinational companies in Azerbaijan act as global “elite licensing institutions” (Fourcade, 2006) for engineers, validating and even replacing national educational qualifications. But there exists an important difference between the mechanism described by Fourcade and the role of multinational companies in Azerbaijan. Whereas Fourcade describes how economists from peripheral countries go to the core countries to validate their credentials, here we see a change in the direction of this process: multinational companies come from the core countries to the periphery and validate local engineers’ credentials on site. This “license” then makes it possible for such engineers to find work in what Fourcade has called “geographically unspecific jurisdictions” (Fourcade, 2006, p. 152). Moreover, multinational companies in Azerbaijan penetrate the national education system and offer supplementary industry-specific training and internship opportunities. In this way, they tailor the existing curricula to their needs and supplement the state’s diminished capacity to provide state-of-the-art education.

Thus, multinational companies in Azerbaijan’s oil industry have been much more than just providers of employment opportunities. They have redefined the content of engineers’ work and opened the doors of international mobility—and now engineers from Azerbaijan have opportunities to work in any oil-producing region in the world, from Australia to Canada. In doing so, the multinationals have acted as quasi-credentializing global institutions, providing training and validating local qualifications. They also played an important role in the post-Soviet stratification of the profession, creating a small group of engineers with considerably higher incomes as well as access to foreign technologies and practices. The two groups that benefited most from these opportunities were senior professionals on the one hand and entry-level professionals on the other hand. Mid-career professionals had more difficulties in accessing the employment opportunities provided by the globalization of Azerbaijan’s oil and gas industry. Importantly, the criteria of access was often non-professional and included language skills and prior foreign experience, rather than technical knowledge.

Beyond Oil and Gas: Access to New Technology and Engineering Work

The direct integration into the global economy, however one-sided, has also affected the work of engineers in sectors other than the oil and gas industry. The revenues from the international oil contracts have allowed Azerbaijan to massively import new technologies and to invest in large infrastructure projects (Guliyev, 2015; Valiyev, 2014). In public discourse and the local media, especially pro-government media, the access to advanced foreign technologies is celebrated as a sign of modernization and development, as “catching up” with the developed world (Huseynov, 2013). Moreover, the direct access to advanced technologies without Moscow’s mediation is often interpreted as a symbol of Azerbaijan’s sovereignty, somewhat similar to the interpretation of the large-scale transformation of the urban environment in Baku (Grant, 2014).

However, our respondents were ambivalent about the impact of imported technologies on their work and professional skills. Although engineers in general appreciate access to Western technologies, which they see as superior to the Soviet technology they used in the past, they are often critical of the mode of acquisition of these technologies. Ali, a power engineer, summarized these widespread sentiments in the following way:

The availability of this oil, it corrupted our brains, switched them off. The free money is flowing, there is no need to think. I mean—if we compare our opportunities in X organization then [Soviet times—authors] and now. I mean, financial capabilities. There are no restrictions, any equipment can be bought, any services can be found, contracts can be made with any organizations. In the past, all of this was restricted, and we were forced to think of something ourselves. Even if it was somewhat primitive, the brains developed.

In the post-Soviet period, the emphasis has been on the acquisition of “hardware”—equipment, machinery, ready-made products and turnkey projects, rather than on the transfer of technical knowledge and the development of skills. This happens in a wide range of industries: drilling rigs and pipes for the oil and gas pipelines are shipped from abroad and only assembled in Azerbaijan; celebrated new buildings such as Crystal Hall, the venue of the 2012 Eurovision contest, and the award-winning Heydar Aliev Cultural center, designed by the famed British architect Zaha Hadid, were designed and constructed by foreign specialists. Engineers in Azerbaijan do not participate either in R&D or in the manufacturing process and have limited opportunities to acquire the informal “tacit knowledge” which is an integral part of any technology (Radosevic, 1999, pp. 14–30). Thus, they act only as consumers of the imported equipment or technology, or at best, participate in the final assembly of this technology. As a result, their understanding of new technological processes remains superficial and is limited to “routine tasks” (Vahid, power engineer, interview) such as assembly, operations, and maintenance. A telling metaphor used by several of the respondents was that such engineers only “push buttons.”

Older engineers, when comparing the process of technology acquisition in Soviet times with the current period, note that they had been more involved in the various stages of acquisition of the commissioned equipment. For example, Nasreddin (pipelines engineer) described the process of acquisition of a pipe-laying vessel from a Western European manufacturer back in 1970s. At that time, Nasreddin together with two other specialists who would later work on the vessel, spent nearly a year at the manufacturing plant, observing the process of construction and assembly of the vessel. This allowed them to develop a thorough knowledge of the acquired equipment. Another, non-conventional form of technology acquisition involved reverse engineering of Western products, where engineers disassembled acquired products in order to replicate or create modified versions of the same products. The reverse-engineered products then went through the whole technological process, including design, prototyping, and testing, before being introduced into mass production. This allowed engineers to master the technology they were copying and develop tacit knowledge about its characteristics. This is how Rza (petroleum engineer) describes this process:

Design—well, they took American packers, ⁹ I went through all this. […] I used to work in the special design bureau, where we received American packers from N company. And we had to make a drawing, change some parameters, and this packer turned from […] into […], received a Soviet name.

It is worth noting that Soviet methods of technology acquisition were considered superficial (Radosevic, 1999). Yet compared to the acquisition of turnkey technologies that are currently practiced in Azerbaijan, they involved greater element of knowledge transfer. With the technologies purchased on a turnkey basis, such tacit knowledge of the acquired technology is no longer developed. Furthermore, engineers have now limited role in making decisions about acquisition of new technologies: these decisions are usually made at the level of administration, which are rarely staffed by engineers. Thus, new technology is acquired by the management and presented to engineers who are expected to find out how to operate it themselves.

To a certain extent, the limited access of Azerbaijani engineers to R&D and manufacturing is a globally driven process. Modern industrial production is a transnational process, and many functions that used to be vertically integrated in the autarkic Soviet industrial system, are now divided among different locations in the world (Gereffi, 1994). Engineers recognize this existing global division of labor as a given, but their concern is that Azerbaijan is increasingly “sliding down” (skatyvayetsa) in this hierarchy of division of labor, in terms of the capacity of its engineers to master modern technologies. If well-educated Soviet engineers were seen as “on par” (na urovne) with Western colleagues, this is no longer the case. The wholesale import of turnkey technologies and the decline of engineering expertise are seen as two mutually reinforcing processes. The fear, most explicitly expressed by Rahman, a professor of power engineering, is that Azerbaijan would turn into a country that is not even able to adjust foreign technologies to its needs and that it will join the ranks of the least developed countries that have to import foreign expertise as well as foreign technologies. In his words, “we would need to hire foreigners in order to change a light bulb.”

According to several of our respondents, the ultimate responsibility for this state of affairs lies with the state’s policies. Besides the oil-led development, our respondents identified specific problems with R&D and education policies. Thus, Edhem, professor of power engineering, argues that under current policies, enterprises are encouraged to import equipment and technologies, through a variety of means, including funding and crediting mechanisms. ¹⁰ At the same time, state support for domestic industrial R&D has been minimal, and there are currently no mechanisms that would encourage private investments in this sector. As a result, both state enterprises and private entrepreneurs are not interested in going through the time-consuming and financially risky processes of design, development, and testing of new products. The extensive infrastructure of industrial research institutes inherited from Soviet times has shrunk considerably with many institutes closed, downsized, or merged with others, and their innovation capacity is very low (Gzoyan et al., 2015).

In general, downsizing of Soviet period R&D institutions may be a positive development, given the long-standing Soviet problem of overstaffing, as well as the redundancy of some of their functions, such as for example, reverse engineering. But the downsizing that took place in Azerbaijan has been erratic and ad hoc and is a result of the continuous reduction of R&D rather than a coherent strategy of restructuring. For example, downsizing has affected the areas of strategic importance, such as oil and gas industry. The closing down of a gas-related research institute is an example of how this process has been taking place. Opened at the beginning of 1960s, this institute used to conduct research on gas for the whole of the Soviet Union, including North Siberia, Turkmenistan, the Northern Caucasus, and countries in the Soviet Bloc. Most of this work was discontinued after 1991, but some laboratories continued to participate in cooperative projects with Russia well into the late 1990s. In 2009, this institute was closed down, and only a few pipeline designers were offered full-time jobs at a much smaller R&D division of SOCAR, for the purpose of designing a national network of gas distribution. Other former employees are occasionally invited for consulting by SOCAR on short-term and part-time contracts. The irony of the situation is that the institute was opened when Azerbaijan was producing very little natural gas, and it was closed when Azerbaijan became a significant producer and exporter of gas following the discovery of two major oil and gas fields.

Another important problem is the growing gap between skills acquired through formal education and the requirements of new technologies. In the previous section, we have discussed how multinational companies bridge this gap through offering training opportunities for students. Outside of oil-related specializations, such additional training is unavailable. Moreover, the mandatory links between engineering education and industry that existed in Soviet times, such as internships and various forms of practical learning at functioning industrial enterprises, have been disrupted. Thus, formal engineering education in state universities provides little more than “the skill of working with the literature” (Namik, electrical engineer). At the same time, the older experienced professionals lack the information technology (IT) and English language skills that are necessary for mastering new technologies. They therefore have to rely on those who have such skills; but often English-speaking young people do not have a sufficient technical background. As a result, even routine tasks of operating a piece of foreign equipment often require a combination of skills which are distributed among different people and require their interaction. In the words of one respondent, Mehti (an IT specialist): “There are very good engineers in our organization, but they don’t understand English. So they need some guy who would stand nearby and explain and translate. In this organization, I became such a guy.”

To summarize, despite minimal foreign investment outside of the oil and gas sector, engineers’ work in all sectors of industry has been deeply affected by the access to foreign technology. Yet the current approach to technology acquisition, which emphasizes turnkey acquisition, as well as state policies in R&D and education, have served to reduce the scope of engineers’ work as well as their influence on decision-making in industry. In the view of most engineers, the state remains the key actor in determining the future of industrial development and thus of their own work.

Conclusion

In this article, we have attempted to understand how the engineering profession in Azerbaijan has changed with the integration of Azerbaijan into the global economy following the dissolution of the Soviet Union. Two particular changes appear significant: the opening of the oil industry to transnational companies and the country’s increased access to new foreign technologies. In the first instance, the entrance of the multinational oil and engineering service companies into Azerbaijan’s oil and gas sector has resulted in a stratification of the engineering profession into a relatively small group of globally employable engineers and the rest who have limited access to the latest technologies. For this first group of engineers, the role of the multinational companies has been their main source of employment, and these corporations have served as important sites of professional education and training, as well as “global licensing institutions”, often legitimizing their local degrees.

The second, and related process, has been the acquisition of foreign technologies which was made possible with the oil revenues obtained through contracts with the multinational companies in the oil sector. This access is generally celebrated and supported both by the public and the engineering profession in Azerbaijan. However, the declining level of education and lack of state support for local industry and local R&D has led to the shrinking of professional opportunities for engineers. Due to the outdated educational system and the lack of institutional mechanisms for knowledge transfer, local engineers are no longer able to participate in the development of technology, and it is difficult for them to obtain “tacit knowledge” (informal knowledge) in this domain. Instead, they have turned into the operators of ready-bought machinery. Engineering jobs that require a more creative or conceptual approach and abstract thinking and higher technical expertise are no longer available in Azerbaijan.

Both of these trends are parts of a larger pattern of global restructuring of industrial production, which involves the disintegration of what were previously vertically integrated production systems. For the engineering profession, this means a move from a more or less full cycle of technological process that included research, design, testing, manufacturing, construction, procurement, operations and maintenance to a situation where engineers’ functions become more specialized and are concentrated in only a few segments of the global production chains. So far, Azerbaijan has been involved only in the exploration and extraction segments of the oil and gas global production network (Bridge, 2008). Although this is a globally driven process, the role of state policies in determining the place of the country in these production chains is perceived as crucially important by the engineers in Azerbaijan.

It is important to note that as the fieldwork for this research was being completed, several important developments signaling possible changes in state policy took place in Azerbaijan. Azerbaijan’s President Ilham Aliyev announced the need for import-substitution manufacturing as a way to reverse post-Soviet deindustrialization and diversify Azerbaijan’s economy; a state program for industrial development was adopted in 2014 (State Programme, 2014). The launch of Sumgait Technologies Park in 2009–2011 and Mingachevir Industrial Park in 2016 are a part of this program (Sumgait Technologies Park, n.d.; President Ilham Aliyev, 2016).

The need for diversification of the economy has become especially acute since the global decline of oil prices, which began in 2014, and has significantly reduced the revenues from crude oil exports. Another important development has been the launch of Baku Higher Oil School, under the State Oil Company. The school recruited its first students in 2012, and it has quickly begun attracting highly qualified applicants (Baku Higher Oil School, n.d.). The state’s investment in this school may indicate a possible change in the country’s educational policies, at least with regard to the priority area of petroleum engineering and related disciplines. Thus, the combination of global conditions and state policies may lead to future changes in the development of engineering expertise in Azerbaijan.