FORMATION AND IMPLEMENTATION OF A NEW-GENERATION INDUSTRIAL POLICY THROUGH A CLUSTER APPROACH FOR SUSTAINABLE NATIONAL ECONOMIC DEVELOPMENT: THE AZERBAIJAN EXPERIENCE

Abstract

This study analyzes the structural characteristics and cluster-based development potential of Azerbaijan’s industrial sector. The research demonstrates that, although the national industry remains largely resource-oriented, significant opportunities exist for cluster-based development in non-oil sectors. Evaluations using the Competitive Advantage Index (RQI) and Cluster Potential Index (CPI) indicate that the petrochemical, information technology, and green energy sectors possess high competitiveness and clusterization potential, while the agro-industrial sector shows medium potential due to infrastructure and technological limitations. The light industry sector exhibits relative lag, primarily due to deficiencies in design, branding, and technological modernization.
The study further highlights that cluster approaches act as systematic catalysts for innovation: collaboration among enterprises accelerates technology transfer, strengthens R&D and production linkages, and facilitates the creation of added value. Regionally, the Baku–Sumqayıt corridor serves as a strategic hub for petrochemical and high-tech clusters, Ganja–Dashkasan for heavy industry clusters, and Karabakh and Eastern Zangezur for agro-industrial and green energy clusters. These clusters contribute to balanced regional economic activity, increased employment, and enhanced socio-economic resilience.
Findings confirm that the systematic application of cluster approaches is crucial for the success of Azerbaijan’s new-generation industrial policy: it supports the diversification of non-oil exports, deepens the innovation ecosystem, increases high-value production, and enhances the country’s global competitiveness. Policy recommendations include the formulation of a national cluster strategy, implementation of pilot projects in priority sectors, strengthening innovation incentives, and developing human capital to ensure effective cluster-based industrial development.