FEATURES AND PROBLEMS OF IMPLEMENTING ECONOMIC REFORMS IN AZERBAIJAN
EDITOR-IN-CHIEF Prof. Dr. Shahin M. Sadigov Chairman of the Board Economic Scientific Research Institute of the Ministry of Economy of the Republic of Azerbaijan
POTENTIAL BENEFITS OF THE CONFIGURATION OF INTERNATIONAL CORRIDORS AND THE DEVELOPMENT OF TRANSREGIONAL INTEGRATION LINKS
The article systematically examines the legal and economic aspects of the diversification of international corridors, the formation of logistics strategies in foreign trade relations and supply chains. A conceptual model of the coordination of elements forming the corridor system is presented. The article summarizes the theory and practice of the operation of international corridors, and the effective operation of supply routes in foreign trade is justified by the coordination of three components: physical infrastructure, legal regulatory framework and favorable economic conditions. An analysis of the current state of international corridors shows that even a geographically ideal route can lose its strategic importance due to restrictions related to sanctions, lack of a harmonization policy, increased security risks and other factors. The stability of the passages connecting the centres of economic activity to intra-regional territories and global trade routes, legal frameworks and the speed of formalization at border checkpoints are currently the main criteria for choosing corridor routes.
Valida T. Safarova, Murad M. Akhundov ,Gulnara A. Azizova, Sakina Y. Huseynova,
Copyright (c) 2026 FEATURES AND PROBLEMS OF IMPLEMENTING ECONOMIC REFORMS IN AZERBAIJAN https://creativecommons.org/licenses/by-nc-nd/4.0
THEORY OF CHANGE METHODOLOGY AND ITS APPLICATION IN AGRICULTURAL POLICY
The article explores the essence, conceptual foundations, and global practices regarding the application of the Theory of Change (ToC) methodology, which is considered one of the most effective tools in modern monitoring and evaluation systems. The relevance of the study is driven by the complex nature of development challenges in the agricultural sector and the inability of traditional linear management models to fully address this complexity. The study elucidates the conceptual differences between ToC and the logical framework (logframe), results framework, and other traditional logic models. It emphasizes that ToC is not merely a sequence of activities, but a strategic mindset that clarifies causal links, fundamental assumptions, and risks regarding how and why change occurs. Within the framework of the research, ToC is characterized as a mindset, a continuous analytical process, and a “live” strategic product. The article analyzes the specific purposes for which key international organizations operating in the agricultural sector - the Food and Agriculture Organization of the United Nations (FAO), the World Food Programme (WFP), and the International Fund for Agricultural Development (IFAD) - utilize this method. It was determined that these institutions effectively use ToC as a tool for knowledge transfer, justification of investment logic, and crisis management. The main conclusion of the study is that ToC transforms agricultural policy from a static process into an evidence-based, inclusive, and adaptive management mechanism. The application of this method within local administrative structures, particularly in the activities of organisations involved in agriculture and food security, can directly contribute to the systematic analysis of root causes hindering progress and the more efficient allocation of resources.
APPLICATION AND PERFORMANCE EVALUATION OF A HYBRID CNN+LSTM MODEL FOR ANOMALY DETECTION IN CYBERSECURITY
The article formulates an anomaly detection methodology that is resilient against modern cyber threats, operates with high precision, and ensures proactive defense. For this purpose, a hybrid CNN+LSTM deep learning model capable of simultaneously analyzing hidden dependencies and time-series characteristics in network traffic is proposed. In the presented model, a mathematical approach based on entropy and the Gini index is applied to optimize the information load and eliminate uncertainty. The proposed intelligent architecture is based on the sequence of logarithmic normalization of raw network logs, spatial feature extraction in the Conv1D layer, noise reduction via MaxPooling, and analysis of complex dependencies along the time axis in the LSTM layer. To prevent the risk of model overfitting, an adaptive Dropout regularisation is integrated into the architecture. The effectiveness of the developed hybrid architecture was simulated and tested on the internationally recognised NSL-KDD and CICIDS2017 datasets. Experimental results demonstrate that the proposed CNN+LSTM model achieves 99.2% Precision, 98.6% Recall, and 98.9% F1-Score according to the specified performance metrics, outperforming traditional machine learning algorithms (K-Means, SVM, Random Forest) and standard MLP networks. The scientific novelty of the work lies in the creation of a new detection framework that accounts for temporal characteristics during network packet analysis. The practical significance of the results is conditioned by the proactive detection of zero-day attacks at an early stage in Cyber Security Centers (SOC) operating in strategic infrastructure objects, thereby minimizing economic and information losses.
IMPLEMENTATION OF ECONOMIC REFORMS IN AZERBAIJAN AND THEIR IMPACT ON THE DEVELOPMENT OF THE COUNTRY’S ECONOMY
This article analyses the essence of the socio-economic reforms implemented in Azerbaijan and their impact on the sustainable development of the country. It is noted that as a result of these targeted and strategic reforms,macroeconomic stability has been ensured in the country, and favourable conditions have been formed for inclusive and sustainable economic growth.In particular, measures taken to diversify the economy, develop the non-oil sector and promote private investment have made a significant contribution to reducing oil and gas dependence. The article analyses the stages of economic development that Azerbaijan has undergone during its independence in a comparative manner. It shows that after the period of decline in 1991–1995, a stage of sustainable development began in 1996. As a result of the economic strategy established under the leadership of the national leader, Heydar Aliyev, the transition to a market economy and integration into the world economy were successfully implemented in the country, and as a result, a development concept characterised as the "Azerbaijani model" was formed. At the same time, within the framework of the industrialisation policy, directions such as the creation of industrial parks and technoparks, the application of innovative technologies, the expansion of competitive product production and the increase in non-oil exports play an important role in the modernisation of the economy.
PRIVATE SECTOR`S OPPORTUNITIES IN PROMOTING OF INDUSTRIAL PARKS
Globalization and competitive circumstances contribute to the search of new opportunities to stimulate the economy, one of the means of which is the formation of industrial parks (IP) (Kohut et al., 2023). Therefore, the object of study is IP and the subject is the private sector's potential in encouraging them. The purpose of this research article is to define the interpretation of private IP, identify its specific characteristics, their prospective assessment in the Azerbaijani context. In this regard, the objectives of the article include studying the characteristics, conceptual approaches, instruments for their encouragement, regulatory support and problems of their functioning, analyzing the current conditions in the country and putting forward guidelines of promotion. The scientific novelty of article formed from the author's grouping of specific criteria inherent to private IPs and the proposal of substantiated promising directions for their promotion in Azerbaijan. The methodology includes grouping, content-analysis, SWOT-analysis, qualitative analysis of literature, generalization. The scientific conclusions are presented in the following results: - the existence of private and mixed mechanisms for the formation of private IPs, the single point of which is the management of a private managing institution; - schemes for the implementation of PPP in IPs are implemented mainly through infrastructure construction; - international practice denies the likelihood of a private party being a managing institution; - difficulties in promoting private IPs are mainly associated with the managing institution and the formation of pseudo-IPs; - websites of owners of Azerbaijani private IPs provide some spectrum of information; - the formation of Azerbaijani private IPs through PPP; - lack of formation of the regulatory framework of the functioning of Azerbaijani private IPs. In connection with the conclusions, guidelines for regulatory improvements, monitoring and proactive activities to encourage the activities of private IPs were proposed. The practical value of the study covers representatives of authorized government structures interested in promoting the private segment in the sphere of IP, including in the face of Azerbaijani IP`s management agencies and future residents of private IPs.
ECONOMIC AND MATHEMATICAL APPARATUS IN MARKETING COMMUNICATIONS RESEARCH
Despite growing interest in the use of mathematical tools in marketing development, its application is relatively limited and still not widely accepted in everyday marketing decision-making. Many marketers still overlook this connection, or at least the need to focus on it when implementing a marketing plan. In the current digital environment, the greatest challenge remains translating mathematical ideas into recommendations and actions that can directly influence the formation and functioning of marketing plans. This article develops a mechanism for the effective interaction of economic and mathe-matical tools and marketing communications, presenting a roadmap for this process.
THE ROLE OF ECONOMİC REFORMS AND THE LABOR MARKET İN AZERBAİJAN İN THE PERİOD 2014–2023
This article systematically examines the complex impact of twelve key economic reforms implemented in the Republic of Azerbaijan between 2014 and 2023 on the labour market. The reforms are classified into three functional groups: legal and institutional framework, active employment programmes, and social protection mechanisms. A differential analysis is conducted for each group with respect to unemployment dynamics, wage levels, the number of hired workers, and the scale of informal employment. The findings reveal that the unemployment rate fell from 7.24% in 2020 to 5.30% in 2024, while the average monthly nominal wage rose from 732,1 manats in 2021 to 1009,4 manats in 2024, representing an increase of 37.9%. The establishment of the DOST Agency ensured the integration of social services, and the unemployment insurance system significantly strengthened worker protection. The main shortcomings identified include the slow elimination of informal employment, the incomplete alignment of the vocational education system with labour market demands, and persistent regional disparities. The scientific novelty lies in the fact that 12 reform documents are, for the first time, unified within a single analytical framework, and their impact on labour market indicators is assessed across three independent criteria: statistical dynamics, institutional change, and international comparison.
ASSESSING THE DEMOGRAPHIC FACTOR IN AZERBAIJAN’S ECONOMIC GROWTH
Between 2000 and 2015, Azerbaijan experienced one of the fastest periods of economic growth in the world, after which growth slowed sharply. This article examines the extent to which a changing demographic structure, particularly shifts in the share of theworking-age population, can distort a key economic indicator such as gross domestic product (GDP) per capita. Based on World Bank data for 2000–2024, growth is decomposed into four components: population growth, changes in the share of the working-age population, employment dynamics, and labor productivity. The analysis shows that during 2000–2015, the increase in the share of the working-age population amounted to 0.66 percent annually and strengthened the demographic dividend, making per capita growth appear stronger than it actually was. After 2015, however, this dividend reversed, as the share of the working-age population began to decline by 0.18 percent annually, weakening GDP per capita growth. The counterfactual analysis shows that if the pre-2015 demographic trend had continued through 2024, annual GDP per capita growth would have been approximately 0.83 percentage points higher. This would imply an additional 8.3 percentage points of per capita income growth by 2024. The findings suggest that GDP per working-age person is a more informative indicator for evaluating Azerbaijan’s economic performance, interpreting growth dynamics more accurately, and showing the macroeconomic effects of demographic change more clearly.
FEATURES OF SOCİO-ECONOMİC REFORMS İN AZERBAİJAN İN 2022–2026, STATİSTİCAL İNDİCATORS AND PROBLEMS ENCOUNTERED
The Strategy for Socio-Economic Development of the Republic of Azerbaijan for 2022–2026 aims to ensure the transition from a resource-dependent economy to a sustainable, competitive and diversified model. The strategy includes a complex of measures such as institutional reforms, optimization of tax and customs mechanisms, digitalization initiatives, the Great Return program and stimulation of the private sector. In 2025, GDP grew by 1.4 percent, and the non-oil and gas sector recorded an increase of 2.7 percent. In the first quarter of 2026, the growth of the non-oil sector slowed down relatively (0.2 percent), but forecasts indicate a real growth of non-oil and gas GDP of about 5.0 percent by the end of the year and total GDP reaching 134.1 billion manat. The study estimates the potential growth of the non-oil sector based on the empirical application of the Cobb-Douglas production function (Y = A·K^α·L^β). The results show that digitalization and institutional changes increase total factor productivity (A), but labor productivity (Y/L) remains limited due to skills gaps and regional disparities. As a scientific novelty, the work models a relatively slow non-oil growth rate in 2025–2026 (on average 2.3–5.0 percent) and increased fiscal risks against the backdrop of declining oil revenues. Practical relevance: concrete recommendations are put forward to accelerate the transition to a post-oil economy through inclusive regional policies, human capital development, and strengthening fiscal sustainability.
THE IMPACT OF CITIZENS’ ECONOMIC BEHAVIOR ON THE EFFECTIVENESS OF ECONOMIC REFORMS IN AZERBAIJAN
The purpose of this article is to examine the relationship between the effectiveness of economic reforms implemented in Azerbaijan and the impact of citizens’ economic behavior on these reforms. Economic reforms in the country have been aimed at ensuring macro- and microeconomic stability, improving the business environment, and increasing social welfare. The study demonstrates that the success of reforms depends not only on institutional changes but also on behavioral factors influencing citizens’ economic decisions. The research indicates that financial literacy, trust in public institutions, social norms, and risk perception play a significant role in shaping economic decision-making. Informal economic activities, cash-based transactions, and the shadow economy are considered key factors that may weaken the outcomes of reform policies. At the same time, the expansion of digital payment systems and the introduction of electronic tax services encourage citizens’ integration into the formal economy and strengthen fiscal discipline. The article also shows that short-term reform measures, such as tax incentives and digital promotion initiatives, generate immediate results, while long-term effectiveness depends on gradual changes in citizens’ behavior. Increasing financial literacy, promoting positive social norms, and simplifying administrative procedures are among the main mechanisms that enhance reform efficiency. Overall, the experience of Azerbaijan indicates that the success of economic reforms depends on the integration of institutional and behavioral factors. Sustainable long-term effectiveness requires the alignment of citizens’ economic decisions with formal economic activities and the expansion of digital payment adoption. The scientific novelty of the research lies in evaluating the effectiveness of economic reforms not only through macroeconomic indicators but also through an integrated analysis of citizens’ behavioral factors. The study applies key concepts of behavioral economics to systematically analyze the impact of tax behavior, the transition to digital payments, financial literacy, and institutional trust on reform outcomes.
THE IMPACT OF GLOBAL ECONOMIC UNCERTAINTY ON OIL PRICES, INVESTMENT FLOWS, AND THE ECONOMY OF AZERBAIJAN
This article provides a comprehensive analysis of the impact of global economic uncertainty on oil prices, investment flows, and the economy of Azerbaijan. The main objective of the study is to identify the transmission mechanisms through which global risks affect Azerbaijan’s economy. Both theoretical and empirical approaches are applied, examining the interrelationship between the oil market, investment dynamics, and the development of the non-oil sector. The findings indicate that global economic uncertainty primarily influences Azerbaijan’s economy through oil prices and their volatility. Fluctuations in oil prices weaken the investment environment, particularly leading to a decline in capital investments in the energy sector. This process, in turn, has an indirect negative effect on the growth rate of the non-oil sector. The analysis shows that the potential growth rate of non-oil GDP is approximately within the range of 4–5%, and the sustainability of this growth largely depends on investment flows. At the same time, it is determined that economic growth does not always generate direct inflationary pressure; the level of capacity utilization plays a crucial role in this context. The results of the study demonstrate that exchange rate stability and coordination of fiscal policy play a significant role in mitigating the negative effects of global risks. In particular, the expansion of the non-oil sector and improvement of the investment climate are key conditions for ensuring economic resilience. The scientific novelty of the article lies in presenting the relationship between global uncertainty, oil prices, investment flows, and non-oil growth within a unified analytical framework. The practical significance of the research is that the findings can be useful for improving economic diversification, fiscal sustainability, and investment policy.
RANSFORMING THE SAVINGS POTENTIAL OF THE POPULATION OF AZERBAIJAN INTO INVESTMENTS: CHALLENGES AND STRATEGIC APPROACHES
The findings indicate that low real interest rates, the limited availability of long-term financial instruments, the underdevelopment of capital markets, weak trust in the financial sector, and low levels of financial literacy significantly constrain the effective transformation of savings into investments. In addition, under conditions of uncertainty, risk-averse behavior and a preference for liquid assets lead to the passive holding of savings. The scientific novelty of the study lies in examining the savings–investment relationship not only from a macroeconomic perspective but also through the lens of behavioral economics and institutional trust. This approach provides a deeper understanding of why savings are not fully mobilized into the economic cycle and offers a new perspective on the application of existing theories in the national context. The practical significance of the research is reflected in the development of policy recommendations aimed at deepening capital markets, strengthening financial intermediation, expanding digital investment platforms, developing alternative investment instruments, and enhancing financial literacy. Overall, the effective transformation of household savings into investments is considered a key condition for ensuring sustainable economic growth, increasing financial system stability, and accelerating the development of the non-oil sector in Azerbaijan.
ANALYSIS AND IMPROVEMENT OF THE SCIENCE FUNDING MODEL IN AZERBAIJAN
This article examines the science funding model in the Republic of Azerbaijan, with a particular emphasis on the economic nature, institutional features, and current challenges of institutional (base) funding. The study demonstrates that the financing of scientific institutions in the country is largely dependent on the state budget, while the majority of allocated funds are directed toward salaries and administrative expenditures. This fiscal structure significantly limits the modernization of research infrastructure, the development of experimental studies, and the implementation of innovative initiatives. The research employs comparative analysis and statistical methods to evaluate Azerbaijan's science funding system in comparison with international practices. The experiences of countries with developed innovation systems, including the United States, EU member states, and South Korea, indicate that the effective development of scientific activity requires a balanced combination of institutional funding and competitive project- and grant-based mechanisms. The findings suggesting that improving the efficiency of research in Azerbaijan requires a gradual transition toward a mixed funding model. Such a model preserves the stabilizing role of institutional funding while strengthening the performance orientation and competitiveness of scientific research through project-based and grant funding instruments. The article also proposes several policy recommendations aimed at improving financing mechanisms, including the introduction of performance-based approaches, strengthening university–industry cooperation, expanding research commercialization, and diversifying financial sources. These measures are essential for enhancing the sustainability and competitiveness of Azerbaijan’s national innovation system.
ADDRESSING INCOME INEQUALITY: INTERNATIONAL EXPERIENCE AND PROSPECTS FOR THE AZERBAIJANI MODEL
Income inequality remains a significant challenge to sustainable economic development and social justice worldwide. The unequal distribution of the benefits of economic growth among different segments of society contributes to rising social tensions, the deepening of poverty, and limitations to inclusive development. Persistent disparities in income and opportunities can weaken social cohesion and reduce the effectiveness of economic policies aimed at improving overall welfare. In this regard, the formulation and implementation of effective public policies aimed at reducing income inequality have become an important priority for governments and international organizations. This article analyzes successful international practices in addressing income inequality and examines the possibilities of adapting these approaches within the Azerbaijani context. The findings of the study indicate that in many countries progressive taxation policies, well-designed social transfer mechanisms, increased investment in education and healthcare, and inclusive labor market policies have proven effective in reducing inequality and improving social welfare. In recent years, Azerbaijan has also made notable progress in enhancing the welfare of low-income populations through the expansion of social protection mechanisms and the implementation of targeted social assistance programs. Based on a comparative analysis of international experience, the article systematizes existing policy instruments aimed at reducing income inequality in Azerbaijan, considering the country’s institutional structure and fiscal capacities. The study also proposes a set of policy recommendations aimed at strengthening social protection systems, promoting inclusive growth, and improving the effectiveness of inequality-reduction strategies.
PhD. Farhad G. Mikayilov, Nigar M. Alasgarova, Habiba M. Jabbarova
ECONOMIC TRANSFORMATION OF AZERBAIJAN IN THE POST-PANDEMIC PERIOD: BUILDING A TRANSPARENT TRADE ECOSYSTEM THROUGH THE DIGITAL INTEGRATION OF CUSTOMS AND TAX SYSTEMS (2020–2026)
The article examines the recovery dynamics of Azerbaijan's economy, digital transformation, and the strategic role of fiscal reforms in the post-pandemic period since 2020. The research period covering 2020–2026 is characterized as a transition of the national economy from a global recession to structural transformation and a stage of sustainable growth. Through the analysis of macroeconomic indicators, the author determines that the record growth of GDP reaching 133.9 billion AZN in 2022 is directly linked to both energy revenues and the diversification of the non-oil sector, particularly in construction, ICT, and agriculture. The primary focus of the study is the digitalization of customs and tax systems. In this context, the results achieved in simplifying trade procedures, reducing administrative costs, and increasing transparency through the "Customs DEVELOPMENT Model," "Smart Customs," and "Single Window" principles implemented by the State Customs Committee are substantiated. Additionally, the role of digital financial support mechanisms implemented by the Ministry of Economy in preserving jobs during the pandemic is emphasized. It is noted that the implementation of electronic management mechanisms serves as a decisive tool in combating the shadow economy by minimizing the human factor in state-business relations. The article considers the qualitative renewal of human capital and the adaptation of human resources to new economic challenges as a strategic necessity during the digital transition. Furthermore, current challenges hindering the full effectiveness of reforms, such as the lack of institutional coordination, cybersecurity risks, and regional digital inequality, are analyzed. Finally, it is highlighted that the application of Artificial Intelligence and Big Data technologies are fundamental factors ensuring Azerbaijan's integration into global value chains and long-term economic resilience.
ASSESSMENT AND PRİORİTİZATİON OF BARRİERS TO DİGİTAL TRANSFORMATİON İN THE REPUBLİC OF AZERBAİJAN USİNG A HYBRİD DELPHİ–TOPSİS APPROACH
The primary objective of this study is to identify the main barriers to digital transformation in the Azerbaijani economy and to assess their relative importance using a hybrid Delphi–TOPSIS approach. The application of this hybrid methodology enables the formation of expert consensus while also allowing the objective ranking of alternatives within a multi-criteria decision-making framework. Through the Delphi method, a two-stage evaluation process was conducted with the participation of 15 experts representing different fields. Initially, potential barriers were identified, and subsequently, a consensus-based list was developed according to their level of significance. The empirical basis of the study consists of a large-scale survey covering 450 enterprises, of which 200 are large and medium-sized enterprises and 250 are small and medium-sized enterprises (SMEs). The survey results indicate that the most common challenges in the digital transformation process include insufficient human capital, limited financial resources, uneven development of digital infrastructure, institutional resistance to change, and cybersecurity risks. The findings reveal that the most critical barriers are the shortage of qualified personnel (TOPSIS coefficient: 0.78) and limited financial resources (0.75). The study provides scientifically grounded recommendations for policymakers regarding the optimal allocation of resources in digital transformation strategies.
DIGITAL SOVEREIGNTY: RELEVANCE AND ESSENCE
In this article, have been researched issues related to the essence and relevance of digital sovereignty. The author primarily emphasizes the impacts of the digitalization process on public life and shows that digitalization reflects not only technological, but also social, economic, administrative, ethical, and philosophical aspects. Today, digital technologies, which have penetrated widely into the most diverse areas of public life, have a serious impact on the structure, content and nature of public relations in those areas. Factors that necessitate digital sovereignty include cybersecurity risks, i.e. the need to protect the country's information space from external interference and cyberattacks, neutralizing external influences in the social media and information environment, protecting personal data, ensuring control over digital infrastructure, technological competitiveness, etc. According to the author, digital sovereignty is not a separate type or form of sovereignty that is an alternative to state sovereignty. It is simply a manifestation of state sovereignty, which is unified and indivisible, in the digital environment (cyberspace). In the article, various approaches to the essence of digital sovereignty are analyzed, and the author’s position on the relationship between the concepts of “digital sovereignty” and “information sovereignty” is presented. In conclusion, all ideas presented and the research and analyses conducted within the article are summarized, and certain considerations are put forward.
THE PARADIGM OF DIGITALIZATION AND THE DIGITAL ECONOMY
The digital transformation of the modern economy is considered a significant trend conditioned by the newly formed characteristic features of the entire economic system. Since the first half of the 21st century, the digital economy has become an important trend in the development of the global economy. As a determining factor, digitalization has a tangible impact on the development of any socio-economic system in the 21st century. The acceleration of digitalization processes is primarily driven by the capacity of modern technologies to significantly enhance the efficiency of activities carried out by various actors (both individuals and legal entities), economic sectors, and the economy as a whole. Consequently, the development parameters of the national economy, as well as the overall standard of living, undergo qualitative changes. The technological leap of human society, which ensures increased productivity, creates new opportunities while simultaneously generating new risks. The digital economy opens new opportunities for businesses to access markets, thereby influencing the competitiveness of each economic sector.
GREEN TRANSFORMATİON AS A NEW STAGE OF ECONOMİC REFORMS İN AZERBAİJAN
The green transformation process is taking place in the world. This article analyzes the green transformation process in Azerbaijan. Against the backdrop of global climate change, energy security and sustainable development challenges, structural renewal of the Azerbaijani economy has become a necessity. The economic model traditionally based on fossil fuel resources is gradually diversifying and shifting to renewable energy sources. The changes taking place in the country's energy sector and the development prospects of renewable energy sources are examined. The green transformation strengthens diversification in the energy sector, leads to attracting foreign investments, and creates new employment opportunities. At the same time, challenges such as reducing dependence on the oil and gas sector and changes in the labor market are identified. The prospects for strengthening Azerbaijan's position in regional and global green energy markets are also emphasized. In particular, the wind energy potential of the Caspian Sea and the initiatives to form "green energy corridors" can take the country's role as an energy exporter to a new qualitative stage. In this context, Azerbaijan has the opportunity to become not only a country exporting raw materials, but also a regional center providing clean energy and technology solutions. Green transformation encompasses large-scale reforms not only in the energy sector, but also in the industrial, agricultural, and transport sectors. The introduction of new innovations is accompanied by digitalization and efficient use of resources. Strategic roadmaps adopted by the state, international cooperation, and attraction of foreign investments are presented as the main factors accelerating the development of the green economy. At the same time, the risks that may arise during the transition period - increased financial costs, technological dependence, and institutional adaptation problems - are also analyzed. The successful implementation of the green transformation becomes clear in the presence of effective institutional reforms, technological innovations, human capital development, and financial support. This transition process can contribute to the long-term sustainable development of Azerbaijan. Green transformation constitutes a qualitatively new stage of economic reforms in Azerbaijan and acts as one of the main pillars of the country's long-term sustainable development strategy.
ENERGY TRANSFORMATION IN CENTRAL ASIA AND THE CAUCASUS REGION AND MAIN DIRECTIONS OF REGIONAL COOPERATION OPPORTUNITIES
Purpose of the research – The main objective of the study is to analyze the opportunities, challenges, and regional cooperation potential of the green energy transition in Central Asia and the Caucasus region, with a particular focus on assessing the strategic importance of the “Trans-Caspian Green Energy Corridor” project. Research methodology – The study employs descriptive and analytical methods, conducting comparative analysis based on reports from international organizations, official statistical data, and strategic documents. A qualitative approach is predominantly used in evaluating normative and institutional frameworks. Research findings – The establishment of effective cooperation mechanisms in the energy sector among regional countries, the realization of renewable energy potential, and the modernization of energy infrastructure in line with international standards can accelerate the energy transition. In this regard, the “Green Energy Corridor” is evaluated as a strategic platform. Research limitations – Political and economic asymmetry among regional countries, technological inequality, institutional incompatibility, and limited access to financial resources are the main factors complicating integration. Originality of the research – The study provides a comprehensive approach by analyzing regional energy cooperation within a unified framework in the context of energy security and climate change. Scientific novelty of the research – The article presents a combined analysis of both geo-economic and political aspects of green energy corridors. This approach contributes to a relatively underexplored area in existing literature. Practical significance of the research – The research findings can serve as an analytical basis for the development of sustainable energy policy, planning of strategic energy projects, and strengthening international partnerships for Azerbaijan and other countries in the region.
THE GREEN PARADOX OF ECONOMIC REFORMS: INSTITUTIONAL AND BEHAVIORAL CHALLENGES OF AZERBAIJAN’S TRANSITION TO A CIRCULAR ECONOMY
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.
EVALUATION OF SUSTAINABLE DEVELOPMENT INDICATORS USING STATISTICAL AND ECONOMETRIC MODELS: AN EMPIRICAL STUDY OF AZERBAIJAN
The article provides a comprehensive examination of the interrelationships between the economic, social, and ecological components of sustainable development, using statistical and econometric approaches in the case of Azerbaijan. The aim of the study is to quantitatively assess the relationships between these components and to identify the main factors influencing the level of sustainable development. Within this framework, a multi-variable regression model was constructed based on official statistical data and analysed using the least squares method. The results obtained show that economic growth has a positive effect on the overall level of development, but the rise in the level of inflation, increasing unemployment and the intensification of the ecological burden are the main factors that weaken this effect. The results of the model confirm the high explanatory power of the selected indicators for sustainable development and reveal that structural dependencies still exist within the economic system. The scientific novelty of the study lies in the fact that the sustainable development indicators have been assessed not only descriptively but also within an econometric model that reveals causal relationships. This approach allows for a deeper understanding of the existing trends. From a practical perspective, the findings are significant for the formulation of public policy. In particular, measures aimed at diversifying the economy, strengthening social protection mechanisms, and expanding efforts to preserve ecological balance are justified as key priorities. Overall, the research demonstrates that sustainable development can only be achieved through a comprehensive and balanced approach.
THE ROLE OF PROJECT MANAGEMENT İN EXPANDİNG İNVESTMENTS İN LOCAL AND İNTERNATİONAL BUSİNESSES
The aim of the article was to analyze the role of projects and their management in increasing investments in international businesses from a scientific, theoretical and practical perspective. It can be noted that businesses are facing increasingly high competition in terms of attracting local and foreign investments in a rapidly globalizing international economic environment. One of the most important factors in supporting the strategic development, high innovation and sustainable competitiveness of an enterprise is its ability to attract local and foreign investments and use them with maximum efficiency. This article examines in more depth how project management ensures the long-term profitability of businesses both locally and internationally and how it facilitates the process of attracting investments. One of the main factors ensuring the sustainable and sustainable development of businesses in modern times is the purposeful, planned organization of investment-oriented project management. Local businesses can attract higher levels of investment when they understand the great importance of project management and develop effective planning. This, in turn, results in long-term sustainable development, competitive innovative approaches and competitive advantage in the modern world economy. Proper management of investment projects plays an important role in the implementation of innovations and increasing the economic strength of the business. Therefore, the main focus of project management for each company at the next stage of development should be on achieving long-term sustainable socio-economic results.
INDUSTRIAL EXPORT DIVERSIFICATION AS A FACTOR OF SUSTAINABLE ECONOMIC GROWTH IN AZERBAIJAN
The article is devoted to the analysis of the process of industrial export diversification in the economy of Azerbaijan, its nature, dynamics, and role in ensuring economic resilience. The relevance of the study is determined by the fact that Azerbaijan’s economy has long been highly dependent on oil and gas exports, while fluctuations in global energy prices have created serious risks for the country’s macroeconomic stability, state budget revenues, and foreign currency earnings. In recent decades, instability in global energy markets, geopolitical crises, and changes in the international trade environment have made export diversification one of the key priorities of economic policy. The main purpose of the article is to examine the development trends, structural changes, and product diversity of Azerbaijan’s non-oil industrial exports during 2005–2025, as well as to determine the level of export diversification and assess its impact on economic resilience. The study is based on statistical data from the State Statistical Committee of the Republic of Azerbaijan, the World Bank, the United Nations Conference on Trade and Development, the International Monetary Fund, and other international organizations. Comparative-statistical, structural, dynamic, and economic analysis methods were employed in the research. The findings demonstrate that significant changes have occurred in the structure of non-oil industrial exports in recent years. The share of products from the chemical, metallurgical, agro-processing, food, construction materials, and light industries has increased. The participation of different branches of the manufacturing sector in exports has become more balanced, while product diversity and opportunities to enter new markets have expanded. This process is of great importance for the structural transformation of the economy, the increase of economic complexity, and the strengthening of resilience to external shocks. At the same time, in some sectors exports remain concentrated in a limited range of product groups and traditional markets, indicating that the diversification process has not yet been fully completed. As a result, it has been determined that the consistent continuation of export diversification policies, the development of innovative sectors with high added value, the expansion of competitive industrial production, and broader access to new regional and global markets are among the main
FORMATION OF THE INNOVATIVE AND STRATEGIC PROJECT MANAGEMENT SYSTEM: INTERNATIONAL EXPERIENCE AND THE REALITIES OF AZERBAIJAN
In the context of modern globalization, the effective management of innovative and strategically significant projects plays a crucial role in enhancing economic development and strengthening national competitiveness. This article examines the formation of a management system for innovative and strategic projects through a comparative analysis of international experience and the realities of Azerbaijan. The research methodology is based on a review of scientific literature, analysis of statistical indicators, and comparison of empirical findings. International evidence demonstrates that advanced project management systems, including portfolio management and Project Management Offices (PMOs), significantly contribute to the successful implementation of strategic objectives. Such management models ensure not only technical efficiency but also support long-term sustainability and the development of an innovation-oriented organizational culture. The analysis conducted within the Azerbaijani context indicates that although certain progress has been achieved in terms of human resources and institutional frameworks, significant gaps remain in the application of international standards and in the full implementation of innovative management practices. Considering the current situation, aligning the national project management system with international best practices and strengthening the regulatory and institutional framework represent important priorities. The findings suggest that the successful development of an innovative and strategic project management system in Azerbaijan requires substantial progress in human capital development, the adoption of digital management tools, and integration with global governance frameworks.
ECONOMETRİC ANALYSİS OF THE STRUCTURE OF FREİGHT TRANSPORTATİON İN THE TRANSPORT CORRİDORS OF AZERBAİJAN AND İTS PROSPECTS
Transport corridors, as one of the most important elements of the modern economy, play a key role in the formation of trade flows, logistics connections and transit opportunities between countries. The Republic of Azerbaijan, which is located in a particularly favorable geographical position at the intersection of international transport corridors, is of strategic importance in interregional freight transportation. In general, in the modern world, having transport-transit-logistics opportunities is considered one of the main advantages. In fact, there is an economic struggle among the world's countries for having favorable transport-transit opportunities. Because in the 21st century, characterized by rapid integration and globalization processes, issues such as access to foreign markets, active participation in processes taking place in the global space, formation of competitive national production, flexible access to necessary markets, etc. have become a necessary condition for the sustainable development of modern nation-states. All this is impossible without transport connections. The fact that our country is located within the North-South, East-West transport corridors creates certain advantages. The purpose of the study is to analyze the changes in freight transportation along transport corridors in the Republic of Azerbaijan for 2023-2025 based on an econometric approach, as well as to conduct research towards a more efficient use of international transport corridors. For this purpose, a logarithmic linear panel data model was applied, which allowed to simultaneously assess both changes over time and structural differences between corridors. Based on all this, proposals and recommendations have been developed for more efficient use of transport and transit opportunities, more flexible organization of transportation along international transport corridors, especially the Middle Corridor.
FORMATION AND IMPLEMENTATION OF A NEW-GENERATION INDUSTRIAL POLICY THROUGH A CLUSTER APPROACH FOR SUSTAINABLE NATIONAL ECONOMIC DEVELOPMENT: THE AZERBAIJAN EXPERIENCE
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.
MODERN TECHNOLOGICAL TRENDS IN ELECTRICAL ENGINEERING
In the modern era, Artificial Intelligence (AI) and the Internet of Things (IoT) are considered key drivers of technological transformation in the electrical engineering industry. AI, as an artifact resulting from human creativity, encompasses computational systems capable of performing tasks associated with human intelligence. IoT provides competitive advantages through applications across various domains, including industrial manufacturing, smart cities, e-government, and healthcare. Smart devices and intelligent manufacturing systems, featuring context-aware sensitivity, autonomous computation, and network connectivity, form the core components of Industry 4.0, collecting, processing, and managing data. AI-integrated systems optimize production, enhance productivity, reduce costs, and improve quality through digital twins, generative design, and predictive maintenance. Green technologies - such as cloud computing, virtualization, and renewable energy sources - are crucial for both industrial and individual users, reducing energy consumption and carbon emissions. These trends strengthen the country’s digital transformation, promote sustainable economic development, and position it as a regional technological leader.
ANALYSIS OF QUANTITATIVE AND QUALITATIVE INDICATORS OF ICT INFRASTRUCTURE IN THE FORMATION OF AZERBAIJAN'S DIGITAL ECONOMY
The study involves extensive comparative analyses based on the official reports of the State Statistical Committee of the Republic of Azerbaijan covering the last five years, as well as global ranking indicators of the digital economy. The findings indicate that although broadband internet access and fiber-optic infrastructure networks have expanded significantly in the country, there remains substantial untapped economic potential for increasing the share of ICT in GDP and completely eliminating the regional "digital divide." The scientific innovation of the article lies in the theoretical and practical substantiation of the strategic role played by digital infrastructure in preserving national economic sovereignty and enhancing resilience against global threats within the framework of new challenges. The research identifies that digital transformation is not merely a technological upgrade but also a decisive strategic tool for regulating imbalances in regional labor markets and internal migration flows. The practical significance of the work is that the digital optimization models and modern elements of the Fourth Industrial Revolution proposed herein can be utilized as a practical document by relevant executive structures to enhance the efficiency of state reforms. In conclusion, specific scientific-practical recommendations and future development scenarios have been put forward for expanding national cloud systems, big data analytics, and the formation of a cyber- resilient economic ecosystem.
SMART - GREEN NEXUS İN POST-CONFLİCT ECONOMİC RECOVERY: A STRATEGİC ROADMAP FOR THE LİBERATED TERRİTORİES OF AZERBAİJAN
This research explores a novel paradigm for post-conflict economic recovery by examining the synergistic relationship between "Smart City" technologies and the "Green Economy" framework. Unlike traditional reconstruction models that focus on restoring the status quo ante, this study proposes a "Leapfrogging" strategy, enabling war-torn regions to bypass outdated industrial stages and integrate directly into the Fourth Industrial Revolution (4IR). Focusing on the liberated territories of Azerbaijan, the paper analyzes the macroeconomic multipliers of AI-driven infrastructure, renewable energy clusters, and carbon credit financing. Through econometric modeling and a strategic SWOT analysis, the study demonstrates that the "Smart-Green Nexus" significantly reduces operational costs, enhances resource efficiency, and attracts ESG-oriented foreign direct investment. The "Smart Village" project in Aghali is presented as a primary case study for sustainable rural development. The findings provide a strategic roadmap for policymakers to transform post-conflict zones into competitive, high-tech, and zero-emission economic hubs.