THE GREEN PARADOX OF ECONOMIC REFORMS: INSTITUTIONAL AND BEHAVIORAL CHALLENGES OF AZERBAIJAN’S TRANSITION TO A CIRCULAR ECONOMY

Abstract

The article analyzes the institutional and behavioral aspects of economic reforms implemented in Azerbaijan in the context of the transition to a circular economy. The main objective of the study is to identify inconsistencies between the normative–legal framework and actual economic behavior, as well as to conceptually substantiate the phenomenon of the “green paradox” that emerges during the implementation of green economy policies. Within the scope of the research, strategic state documents, institutional mechanisms, and behavioral characteristics of economic actors are comparatively evaluated. The research findings indicate that although important strategic documents and institutional initiatives aimed at the development of a green economy and the transition to a circular model have been formed in Azerbaijan, their practical implementation is accompanied by a number of institutional and behavioral limitations. In particular, the insufficient development of economic incentive instruments, the relatively low level of adaptation of market participants to new economic models, and coordination problems among governance institutions are identified as key factors slowing down the widespread implementation of circular economy principles. This situation creates a contradiction between normative approaches and actual economic behavior, which is characterized in the study as the “green paradox”. The article proposes scientifically grounded recommendations aimed at strengthening institutional coordination, improving economic incentive mechanisms, and introducing behavior-oriented policy instruments. The scientific novelty of the study lies in the systematic conceptualization of the “green paradox” in the process of Azerbaijan’s transition to a circular economy and in the presentation of a model of institutional–behavioral interaction. The study concludes that the effectiveness of the transition to a circular economy depends on the parallel development of institutional coordination, economic incentives, and behavioral adaptation of economic actors.