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
SYSTEMIC–CREATIVE MODELS IN INNOVATION MANAGEMENT: APPLICATIONS FOR AZERBAIJANI ENTERPRISES
This article examines the significance of systemic–creative innovation management models for achieving sustainable competitive advantage in modern Azerbaijani enterprises. In an era of increasing global competitiveness and economic transformation, firms must manage their innovation activities not merely through spontaneous creativity but through structured and systematic approaches. Within the framework of this study, an integrated model has been developed by combining internationally recognized methodologies such as design thinking (human-centered problem solving), the four-phase double diamond model (in-depth analysis and iteration of problems and solutions), and the TRIZ methodology (systematic inventive problem solving), adapted to the specific needs of the Azerbaijani market. The proposed systemic–creative model aims to enhance the innovative potential of small and medium sized enterprises (SMEs), foster employee motivation and collective creativity, improve the effectiveness of strategic planning and portfolio management, and stimulate the transformation of a larger proportion of ideas into practical, market-relevant solutions. The article provides a detailed description of the model’s stages, implementation mechanisms, and key performance indicators, supported by specific examples from the local business environment.
innovation management, systemic–creative model, design thinking, double diamond model, Azerbaijani enterprises
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KSOCIO-ECONOMIC SIGNIFICANCE OF THE DEVELOPMENT OF THE AGRI-FOOD MARKET
The article analyzes the socio-economic significance of the development of the agri-food market, its interrelation with food security, regional development, employment, and social stability from a scientific and theoretical perspective. The study shows that structural changes in the agricultural sector and the state’s regulatory policies play a key role in ensuring market resilience. The author’s analysis identifies that institutional and structural limitations in Azerbaijan’s agri-food market persist: weak development of agricultural cooperatives, uneven distribution of the processing industry, incomplete logistics infrastructure, and targeting issues in state support mechanisms limit efficiency. Comparative analysis of international experience shows that the competitiveness of agricultural markets in developed countries is ensured by strong cooperative models, innovative processing technologies, digital management systems, and institutional foundations of public-private partnerships. The article emphasizes that for sustainable development of Azerbaijan’s agri-food market, integration of the production–processing–logistics chain, expansion of digitalization processes, promotion of local brands, and stimulation of export-oriented production are necessary. Furthermore, enhancing the knowledge and skills of market participants, along with the application of modern marketing and trade strategies, plays a significant role in increasing competitiveness. Targeted and transparent implementation of subsidies and investment incentives by the state improves efficiency. Regional market development requires promoting local production and improving logistics infrastructure. At the same time, strengthening the activities of agricultural research institutes and innovation centers facilitates technology transfer and productivity enhancement. In conclusion, modernization of the agrifood market is a strategic direction that ensures not only economic efficiency but also social welfare, food security, and balanced regional development. Thus, the comprehensive and sustainable development of the agri-food market directly contributes to the growth of both economic and social indicators.
Agri-food market, food security, agriculture, state policy, socio-economic development, logistics and processing, international experience, cooperative model, competitiveness, innovative mechanisms.
FROM PERSONNEL MANAGEMENT TO HUMAN RESOURCE MANAGEMENT: HISTORICAL DEVELOPMENT, STRATEGIC ALIGNMENT AND IMPLEMENTATION MECHANISMS
The article comprehensively examines the formation and development stages of Human Resource Management (HRM), as well as the historical necessity, theoretical foundations, and implementation mechanisms of the transition from the concept of “Personnel Management” (PM) to the model of Strategic HRM. The main objective of the study is to identify paradigm shifts in management, determine the mechanisms that ensure strategic alignment between organizational goals and human resources, and analyze the new opportunities created by modern digital approaches in management. The methodological framework of the research consists of systematic, historical-comparative, analytical, and structural-functional approaches. The models of Armstrong (2020), Ulrich (1997), Jabbour (2008), Beer and others, as well as studies by local researchers, were comparatively analyzed. The results reveal that the evolution of HRM requires not only changes in organizational structures but also modernization of management culture, decision-making processes, and leadership models. At the present stage, digital technologies such as the Human Resource Information System (HRIS), Applicant Tracking System (ATS), Learning Management System (LMS), and Enterprise Resource Planning (ERP) provide opportunities for the centralized management of employee data, real-time performance monitoring, and resource optimization. HR analytics and KPI-based evaluation models contribute to improving efficiency, enhancing motivation mechanisms, and increasing transparency in management. The scientific novelty of the study lies in the author’s proposed model of strategic alignment and digital integration of HRM for industrial enterprises in Azerbaijan. This model aims to ensure data-driven decision-making in managing human capital, balance strategic objectives with resource potential, and promote sustainable development. The practical significance of the article lies in improving productivity, optimizing human potential, and increasing flexibility and transparency in management processes.
Human Resource Management (HRM), strategic alignment and digital integration, paradigm shifts in management, HRIS, ATS, LMS, ERP technologies, performance and human capital management.
COMPARATIVE ANALYSIS OF THE STATE OF HUMAN CAPITAL: AZERBAIJAN AND INTERNATIONAL EXPERIENCE
The aim of the research is to conduct a comparative analysis of investments in human capital and to identify the main factors that determine the differences in the level of human capital development between developed and developing countries. The study focuses on analyzing the components of the Human Capital Index (HCI) across selected countries, determining the impact of public expenditures on education and healthcare on human capital development, and developing forecast scenarios and strategic recommendations for Azerbaijan. The research is based on a multi-stage analytical approach, including descriptive analysis, comparative analysis of HCI components, and regression analysis. The data sources include the World Bank’s Human Capital Index for 2020 and statistical data on education and healthcare from Singapore, South Korea, Germany, and Azerbaijan. The analysis primarily utilizes indicators such as GDP per capita, public spending on education and healthcare, duration of schooling, and demographic indicators. The results reveal significant differences in the level of human capital development among the analyzed countries. With an HCI of 0.58, Azerbaijan lags considerably behind Singapore (0.88), South Korea (0.80), and Germany (0.75). This gap is mainly attributed to differences in the quality of education and the effectiveness of the healthcare system. The key findings indicate that the primary gaps in Azerbaijan are related to education quality and health outcomes. The regression analysis confirms the significant impact of public spending on education and healthcare on the development of human capital. The scientific novelty of the study lies in substantiating the synergistic effect of simultaneous investments in education and healthcare for developing economies. The practical significance of the research is to develop concrete policy recommendations aimed at increasing the efficiency of investments in human capital for developing countries, including short-term, medium term, and long-term measures for the modernization of education and healthcare systems.
human capital, expenditures, education, healthcare, comparative analysis
THE ECONOMİC MECHANİSMS BETWEEN EMPLOYMENT AND POPULATİON İNCOME
This study investigates the necessity between employment and population income in Azerbaijan. The research establishes that while Azerbaijan has achieved macroeconomic stability and poverty reduction in past decades, structural labor-market challenges—informality, vulnerable employment, skills mismatches, and gender disparities—continue to weaken the direct transmission of economic growth into higher household incomes. The scientific results demonstrate that employment quality, rather than quantity alone, is decisive for sustained income growth, and that mechanisms combining firm productivity with human capital development yield the strongest income effects. The scientific novelty of the work lies in its integrative approach: the study does not view employment and income as isolated outcomes but as mutually reinforcing components of a national development system. By applying recent data and international diagnostics, it formulates a systemic framework linking sectoral diversification, SME productivity, skills upgrading, formalization incentives, and gender responsive policies into a coherent model. This framework provides a novel conceptualization of how organizational and economic mechanisms can be aligned in Azerbaijan to transform job creation into urable income growth. The practical significance of the essay is its policy-oriented recommendations. It proposes targeted instruments—such as demand-driven active labor market programs, regional cluster development, minimum wage calibration, and social insurance reforms—that can be directly applied by policymakers, ministries, and development partners. These measures not only enhance the inclusiveness of growth but also reduce regional and gender income disparities, expand formal employment, and strengthen the fiscal base. Thus, the study offers both analytical insights and actionable pathways for ensuring that Azerbaijan’s ongoing diversification translates into higher and more equitable living standards for its population.
Population employment in Azerbaijan, population income in Azerbaijan, relationship between employment and income, source of population income in Azerbaijan, employment factor in population income.
LABOR MIGRATION AND ITS MACROECONOMIC IMPACTS
In the context of globalization, labor migration has become an integral part of modern economies. The movement of people from one country to another or from one region to another for the purpose of better working conditions, higher income and social security constitutes the main content of labor migration. This process has a significant economic and social impact on both migrant countries and countries receiving migration. This process represents the departure of people from their native places of residence in search of better living conditions, higher wages and social security. Azerbaijan is also among the countries affected by labor migration processes. Labor migration in Azerbaijan occurs both internally and externally and affects the economic development of the country's regions in various ways. As a result of labor migration abroad, on the one hand, a decrease in the labor force is observed, and on the other hand, remittances sent by migrants increase the level of social welfare of the regions. Structural problems of the labor market in the country, unemployment differences across regions and uneven levels of socio-economic development strengthen these processes. This article analyzes the impact of labor migration on macroeconomic indicators in various countries, especially in developing economies. Migration has a significant impact on the labor market, currency flows, consumption, and economic growth of both donor (sending) and recipient (receiving) countries. The article assesses the economic consequences of labor migration in the context of both international statistics and the Azerbaijani case.
abor migration, recipient, brain drain, labor force, personnel training, unemployment rate, and social aspect
STAGED FINANCING MODELS IN THE DEVELOPMENT PATH OF STARTUP PROJECTS
This article examines how staged financing models support the development and growth of startup ventures. We explore the sequential funding process – from initial seed capital through successive venture rounds – and how each stage of financing aligns with a startup’s milestones and risks. Design/methodology: The study adopts a qualitative, literature-based approach, synthesizing current research and insights (including Kuckertz et al. 2025) on entrepreneurial finance and growth. Key concepts such as venture capital staging, milestone-based tranches, and capital acquisition strategies are analyzed. Findings: Staged financing is found to mitigate investor risk and help sort high-potential projects from weaker ones by funding startups in incremental rounds contingent on performance. Early-stage startups often rely on personal funds and angel investors; as ventures validate their business model and grow, they attract larger VC rounds. Each financing stage corresponds to developmental milestones – e.g. product development, market entry, scale expansion – creating a financing “ladder” aligned with the startup’s progress. Practical implications: Understanding staged financing helps entrepreneurs plan fundraising strategically, maintaining flexibility and control as their venture evolves. For investors, structured multi stage funding with performance milestones improves goal alignment and reduces exposure to failed projects. Originality/value: This article connects the entrepreneurial journey framework with financing theory, highlighting how capital acquisition strategies must evolve through a startup’s lifecycle. We offer an integrated perspective for founders and scholars on linking startup growth stages with appropriate financing models.
Startup financing; Venture capital; Staged investment; Entrepreneurial growth; Milestone funding; Startup lifecycle
TAX POLICY AND ITS MANAGEMENT MECHANISMS IN THE ECONOMIC DEVELOPMENT OF AZERBAIJAN
Tax policy and its management mechanisms play a decisive role in the economic development of any country and in the stable financing of the state budget. In recent years, the main goal of tax reforms implemented in Azerbaijan has been to increase the state’s fiscal potential, optimize the tax burden of taxpayers, the size of the shadow economy, and ensure transparency. This articleevaluates the factors affecting the country's tax potential based on theoretical approaches and econometric analysis methods. The results of the study show that the optimization of tax rates has created favorable conditions for the more efficient implementation of fiscal policy, while digitalization measures have strengthened transparency in administration and enhanced taxpayers’ responsibility. In particular, the introduction of online cash registers, electronic invoices, and unified tax information databases, as well as the facilitation of data exchange among government agencies, has significantly strengthened fiscal discipline. The research also reveals that despite the progress achieved, there is still a considerable tax gap in the country. Empirical analysis proves that the reforms implemented have a positive short-term impact on state budget revenues and increase tax collection. In the long-term perspective, these measures contribute to the expansion of the tax base and strengthen the country’s economic resilience. Thus, modern reforms play a crucial role in improving fiscal efficiency and creating conditions for sustainable economic development. The article concludes that additional measures are necessary to fully realize Azerbaijan’s tax potential. First, it is essential to simplify tax legislation and eliminate inconsistencies. The second important direction is to reduce unjustified and inefficient tax exemptions, which will ensure tax equity and the principle of fairness. The study demonstrates that tax reforms have been an important factor in strengthening Azerbaijan’s fiscal potential, and with continued progress in this area, more favorable opportunities will emerge for the country’s economic growth and budget stability.
tax policy, fiscal potential, tax reforms, digitalization, economic development
EVALUATION OF EDUCATION EXPENDITURES BASED ON THE MEDIUMTERM EXPENDITURE FRAMEWORK IN THE REPUBLIC OF AZERBAIJAN
The purpose of the study is to assess education expenditures within the framework of medium-term expenditures applied in the formation of the state budget in Azerbaijan. Research methodology - comparative analysis, logical generalization, systematic approach, mathematical analysis methods were used in the research work. Applied significance of the study - the substantive analyses examined in the study can be useful in the successful implementation of the medium-term expenditure framework and in determining the economic efficiency of budget expenditures. Research results - It is important in terms of determining the medium-term expenditure framework in the formation of the state budget and determining inter-sectoral expenditures of the economy on this basis and in regulating economic relations. Originality and scientific novelty of the study - The trends in the formation of the medium-term expenditure framework of the state budget, Fechner and Spearman coefficients have been determined.
Medium-term expenditure framework, activity-based budgeting, budget expenditures, GDP, fiscal discipline, efficiency, effectiveness, frugality, human development index, etc.
ISSUANCE OF BONDS AS A FİNANCİNG TOOL İN THE OİL İNDUSTRY OF AZERBAİJAN
The issuance of bonds is one of the widely used financing methods in the fields of economics (fiscal policy) and finance (lending). Issued bonds play an invaluable role in forming both public and private sector projects and budgets through the use of low-interest loans, tax incentives, and the elimination of budget deficits. The main purpose of this article is to discuss the role and practical significance of bonds issued by the State Oil Company of Azerbaijan Republic (SOCAR) for the organization of modernization and reconstruction efforts in Azerbaijan’s oil industry (oil refining industry) since 2016. The main section of the article provides information on the nature of the modernization and reconstruction projects, as well as on the public bond offerings by SOCAR and other enterprises in the period following 2016. The practical importance of the article lies in its analysis and application of easy financing methods not only in the oil industry but also across other industrial and service sectors. Its theoretical significance lies, on one hand, in serving as a stimulus for future research of this kind, and on the other hand, in being a concise methodological guide for those who wish to learn about the structure and importance of bonds as a financial instrument. The scientific novelty of the article lies in the comprehensive analysis of fixed-income bond issuance, which is relatively new to the financial environment of Azerbaijan. The continuous occurrence of organized innovations in both the oil industry and the financial-credit sector can be considered a primary stimulus for writing such articles and dissertations.
bond, fixed-income securities, SOCAR, oil industry, economic policy, finance-credit
EVALUATION OF THE ROLE OF BANKS' BUSINESS LOANS IN INVESTMENT ACTIVITY IN THE NON-OIL-AND-GAS SECTOR
The presented research focuses on comprehensively assessing the role of lending, particularly business lending, which is a key direction of financial intermediation in the banking sector of the Republic of Azerbaijan, in ensuring investment activity in the non-oil and non-gas sectors of the national economy. The main objective of the study is to determine the impact of banks’ business loans on investment processes in the non-oil and non-gas segment of the economy and to measure this impact using various indicators. The study analyzes parameters such as the ratio of loan placements to GDP and non-oil GDP, the share of loans—especially business loans—in bank assets, bank loan interest rates, banks’ non-interest expenses, the share of business loans in banks’ credit portfolios, capital expenditures, and the distribution of working capital. Additionally, the research examines the function of business loans as a source of financing for investments in fixed capital, the share of industry and manufacturing in banks’ loan portfolios, as well as the relationship between banks’ consumer loans and imports. The analysis demonstrates the strategic significance of bank lending in increasing investment activity in the non-oil and non-gas sector and clearly illustrates the impact of credit policy on the real sector of the economy. These findings provide a scientific basis for the formation of banking sector development strategies and the diversification of the national economy, while also serving as a methodological foundation for future research.
Banking sector of the Republic of Azerbaijan, loan placements, business loans, consumer loans, non-interest expenses.
Azar Babayev, Atig Karimov, Emin Amrahov, Nigar Ahmadli
ANALYTİCAL ASSESSMENT OF OFF-BUDGET STATE FUNDS İN AZERBAİJAN FOR THE YEARS 2024–2025
This article examines the financial sustainability, income and expenditure dynamics, and investment activities of extra-budgetary state funds operating in Azerbaijan—namely, the State Social Protection Fund, the Unemployment Insurance Fund, the Mandatory Health Insurance Fund, and the State Oil Fund— over the period 2024–2025. The research evaluates the composition of revenues, the structure of expenditures directed to social protection and healthcare systems, and the interrelations with the state budget based on statistical data and legal documents. The findings indicate that the role of these funds in ensuring macroeconomic stability, strengthening social welfare, and providing long-term financial resilience has been consistently increasing. Special emphasis is placed on the State Oil Fund’s investments in international financial markets, as well as the importance of the State Social Protection Fund and the unemployment Insurance Fund in financing social payments. At the same time, the introduction of mandatory health insurance has facilitated the formation of new financing mechanisms in the healthcare sector. The study concludes that enhancing transparency and efficiency in fund management, reducing investment risks, and stimulating capital inflows into the non-oil sector are essential measures. These findings underline the significant role of extra-budgetary funds in advancing Azerbaijan’s fiscal policy and reinforcing the foundations of a sustainable social state model.
off-budget funds, social protection, mandatory health insurance, state oil fund, pension reform, financial sustainability
THE FORMATION OF INFORMATION SECURITY CULTURE IN SOCIETY: CURRENT CHALLENGES AND PROSPECTS
The article explores the role of information security culture in modern society and its formation. Information security is no longer limited to technical measures but also covers social, legal, and economic aspects. The rapid development of digital technologies and the widespread use of the internet have made the protection of personal and corporate data increasingly relevant. The article emphasizes that public awareness, improvement of legal frameworks, and development of technological infrastructure are key factors in shaping information security culture. In today’s world, cyber threats create serious risks on both individual and collective levels. During the COVID-19 pandemic, the rise of remote work caused phishing and malware attacks to increase, raising the risk of personal data leaks. In Azerbaijan, joint initiatives by the state and private sector have strengthened the national cybersecurity ecosystem. At the same time, the experiences of countries such as “e-Estonia” and Japan show that information security can be reinforced not only by technical means but also through education, awareness, and social approaches. The article reviews international practices and measures taken in Azerbaijan, including national strategies, a stronger legal base, “Smart City” and “Smart Village” projects, cybersecurity training, and preventive technological solutions. Recommendations include expanding awareness campaigns, strengthening legal and governance mechanisms, enhancing public-private cooperation, and applying AI-based innovative cyber defense systems. Ultimately, the article stresses that developing information security culture depends not only on technology but also on the knowledge and responsible behavior of every member of society, ensuring the protection of both national and individual interests.
information security, digital literacy, cooperation, cyber culture, education
AI AND KNOWLEDGE MANAGEMENT: LEGAL AND INSTITUTIONAL PERSPECTIVES FOR AZERBAIJAN’S ECONOMIC DEVELOPMENT
The article is devoted to studying the role of Artificial Intelligence (AI) in knowledge management (KM) processes and its legal and institutional significance for Azerbaijan’s economic development. The research analyzes the impact of generative AI, particularly large language models (LLMs), on the creation, storage, and application of knowledge. It is emphasized that these technologies not only accelerate information processing but also introduce new approaches to the formation and utilization of knowledge in public administration and business. In the national context, the emerging legal and institutional framework provides the foundation for digital transformation and the effective use of AI. The scientific novelty of the study lies in the first comprehensive analysis of AI-driven knowledge management in Azerbaijan, with a focus on strengthening economic independence and security. Key challenges are addressed, including algorithmic bias, cybersecurity risks, dependence on foreign technologies, and a shortage of qualified personnel. Strategies for minimizing these risks are proposed, such as developing local language models and national data centers, implementing educational programs, and establishing ethical AI standards. The practical significance of the article is reflected in recommendations for government institutions and businesses on creating a national knowledge base, improving the quality of public services, and accelerating business processes. Furthermore, the importance of human capital development is underlined, since training specialists in knowledge engineering and AI auditing is a prerequisite for long-term sustainability. In the long run, the integration of AI and KM is considered a strategic factor for economic diversification, strengthening technological sovereignty, and enhancing Azerbaijan’s global competitiveness.
artificial intelligence, knowledge, management, economic security, management, digitalization, economic development.
ANALYSIS OF THE ROLE OF E-COMMERCE IN THE ECONOMY OF AZERBAIJAN OVER THE LAST DECADE
E-commerce has emerged as one of the most significant economic phenomena of the modern era. The rapid development of technology—particularly internet-based and mobile platforms—has strongly accelerated its growth. The exchange of goods and services over the internet has not only transformed consumer behavior but also reshaped traditional business models. Globally, the e-commerce market is expanding exponentially, with annual revenues approaching trillions of dollars. The key drivers behind this growth include the expansion of internet access, increased affordability of digital technologies, and rapidly evolving consumer demands.Azerbaijan, located at the crossroads of Western Asia and Eastern Europe, has also made considerable progress in this field. In recent years, the country has strengthened its digital infrastructure and increasingly embraced online business models. Nevertheless, the market is still developing and faces several challenges, including payment security, enhancement of legal frameworks, and improvements in logistics infrastructure. The economic efficiency of e-commerce lies in reducing transaction costs, simplifying contracts and sales processes, and broadening investment opportunities. Furthermore, it has the potential to mitigate the so-called “resource curse” by diversifying the economy away from its heavy dependence on the oil sector. E-commerce also plays a vital role in fostering international relations, promoting tourism, and encouraging the creation of new business structures. To ensure sustainable growth, it is recommended that government fiscal policies and budget planning be revised to stimulate e-commerce development. Additional support mechanisms for entrepreneurship, coupled with policies encouraging innovation and digital transformation, could further strengthen Azerbaijan’s position in the global digital economy.
e-commerce, online shopping, global market, consumer, economy
DİGİTAL HERİTAGE: EXPECTATİONS AND CONCERNS
The article analyzes approaches to managing digital heritage in different countries. China evaluates digital heritage primarily through a control-oriented framework, combining the identification of digital assets via the real-name system with a centralized management model. The European Union is still working on establishing a clear legal framework in this area. In the United States, the legal complexities of digital inheritance are specifically highlighted, emphasizing the need for a unified federal law to ensure fair and systematic access to digital assets upon death. At the same time, access to knowledge and resources for managing digital afterlife is uneven among individuals. Social and digital inequalities leave many people unprepared in this regard. Addressing this issue requires more accessible educational opportunities, user-oriented technologies, and the establishment of fair policies. Researchers suggest that artificial intelligence technologies can contribute to creating more interactive and meaningful forms of digital heritage. However, they stress that such systems must be developed in accordance with principles that respect the deceased’s personality and intentions. The article explores the concept of creating digital AI models that reflect human knowledge, memories, and experiences in the era of artificial intelligence. It raises profound philosophical and technological questions regarding life and death, examining how digital heritage can preserve and extend human presence beyond mortality.
FUNCTIONS OF SOCIAL NETWORKS: IMPLICATIONS, EMERGING CHALLENGES, AND PROSPECTIVE SOLUTIONS
The article provides a comprehensive examination of the key functions of social networks and their impact on various spheres of contemporary society, while also identifying the challenges arising from their intensive development. Particular attention is devoted to the communicative, informational, economic, socio-political, and cultural-identificational functions. It is demonstrated that social networks have become not only a tool of personal and mass communication but also an essential factor in the digitalization of the economy, the formation of public opinion, and the preservation or erosion of cultural identity. The analysis reveals that the positive effects of social network usage include the expansion of opportunities for global and intercultural communication, the acceleration of information exchange, the development of digital business and e-commerce, the strengthening of civic engagement, and the increased involvement of youth in public processes. At the same time, a number of problematic aspects are identified: the spread of disinformation and manipulative content, the intensification of societal polarization through “echo chambers,” the rise of cyberbullying, the formation of digital dependence, the decline of privacy and threats to personal data, the monopolization of the market by major platforms, as well as processes of cultural unification that lead to the erosion of local traditions and values. Based on the analysis of scholarly literature and contemporary research, a set of recommendations is proposed to minimize the negative consequences of social networks’ functioning. These include enhancing the transparency of algorithms and the accountability of digital platforms, advancing users’ digital media literacy, establishing international standards for the regulation of social networks, supporting cultural diversity, and promoting ethical principles in the digital environment. The findings emphasize the necessity of a comprehensive, interdisciplinary approach to the study and regulation of social networks, which, under conditions of globalization, function as a system-forming element of the global information space. Thus, the study not only highlights the dual nature of social networks—as both a resource for development and a source of risks—but also provides a foundation for developing balanced strategies aimed at managing their effects in the interests of sustainable societal development.
MODERN TRENDS IN LEGAL REGULATION OF THE DIGITAL ECONOMY
The article comprehensively analyzes the legal foundations and regulatory mechanisms of digitalization processes, which are among the priority directions of modern economic development. Digitalization is evaluated not merely as a technological renewal of economic activity, but as a multifaceted process that requires the formation of management relations, legal norms, and social institutions on new principles. As a result of the formation of the digital economy, such concepts as e-government, digital trade, artificial intelligence, and big data have become integral parts of economic circulation and legal relations. The author notes that although digital transformation processes are developing rapidly, their legal regulation in Azerbaijan’s legislative system remains at an early stage. The existing normative-legal acts are mainly fragmentary in nature and do not fully ensure the comprehensive management of digitalization. Thereforethe preparation of systematic and scientifically grounded legal concepts, as well as the integration of international experience into national legislation, emerge as important tasks. The article also emphasizes that the lack of precise legal norms in areas such as artificial intelligence, cybersecurity, the legal circulation of digital assets, and data protection limits the development of the digital economy. Nevertheless, the existing legal framework provides an important platform for future reforms. In the coming years, it is necessary to form a unified legal policy in this field, and develop digital law as an independent institution, and harmonize the normative-legal system with international standards.
rəqəmsal iqtisadiyyat; rəqəmsallaşma; süni intellekt; hüquqi tənzimlənmə; hüquqi baza; hüquqi norma.
NEW CHALLENGES AND OPPORTUNITIES ARISING FROM AI-DRIVEN ECONOMIC REFORMS IN AZERBAIJAN
Abstract: The rapid development of Artificial Intelligence (AI) and digital technologies is profoundly transforming global economies, compelling countries to reconsider their reform strategies in order to enhance competitiveness, increase economic efficiency, and ensure sustainable development. For Azerbaijan, whose economy largely depends on energy resources, particularly hydrocarbon revenues, economic diversification has become even more crucial amid fluctuating energy prices, global geopolitical tensions, and climate change. AI technologies create significant opportunities for optimizing industrial processes, improving resource management, enhancing financial and fiscal services, and advancing education and human capital development. This article analyzes the advantages and potential risks of AI-based economic and social reforms within both international and local research contexts. AI technologies provide extensive opportunities to boost productivity in industry and agriculture, optimize energy and resource use, make financial services more inclusive, improve governance, and foster an innovative business environment. At the same time, automation and digital transformation may cause shifts in the labor market; therefore, reskilling, vocational training, and the development of human capital should be prioritized. The article offers recommendations for policymakers and regulators concerning infrastructure modernization, the strengthening of ethical and legal frameworks, ensuring social justice, and enhancing economic resilience. The conducted analysis shows that the effective implementation of AI can transform Azerbaijan’s oil-dependent economic model into a knowledge- and technology-driven, competitive, and sustainable economic system. At the same time, AI technologies create favorable conditions for regional cooperation, international investment, and the development of innovative startups. The article emphasizes the contribution of AI integration to the country’s economic diversification, social justice, and technological independence.
Artificial intelligence, economic reforms, Azerbaijan, diversification, governance, human capital, innovation
SUSTAINABLE DEVELOPMENT AND WATER SECURITY AS ONE OF ITS FACTORS: GLOBAL PRACTICES AND DOMESTIC POTENTIAL
The paper is about water security and related management issues currently at work in the Republic of Azerbaijan. The country is constantly reforming the water management legal environment. There are many laws and normative acts being enacted, nowadays. Water infrastructure is one of the most vital fields. Azerbaijan acknowledges this and after gaining independence many legislative act have been enforced to make better use of the water resources of the country. There is a traditional agriculture that uses water in large quantities. Gulf countries have made a decision to minimize the agricultural products that drink more water. The author believes that this should also be the case in Azerbaijan. On the other hand, there needs to be a substitution of water-using plants by buying them from outside world. There is also a growing field that makes drinking water from sea water. Although there are several plants in Azerbaijan, author maintains that there is a potential to use sea for some water needs. The paper talks about the ecological and water problems in the broader region and Azerbaijan. Azerbaijan is the country with lowest amount of per capital water in South Caucasus. So, there is a need to take actions before it is late. The paper proposes several recommendation to solve the water issues in agriculture and beyond. laws and normative acts being enacted, nowadays. Water infrastructure is one of the most vital fields. Azerbaijan acknowledges this and after gaining independence many legislative act have been enforced to make better use of the water resources of the country. There is a traditional agriculture that uses water in large quantities. Gulf countries have made a decision to minimize the agricultural products that drink more water. The author believes that this should also be the case in Azerbaijan. On the other hand, there needs to be a substitution of water-using plants by buying them from outside world. There is also a growing field that makes drinking water from sea water. Although there are several plants in Azerbaijan, author maintains that there is a potential to use sea for some water needs. The paper talks about the ecological and water problems in the broader region and Azerbaijan. Azerbaijan is the country with lowest amount of per capital water in South Caucasus. So, there is a need to take actions before it is late. The paper proposes several recommendation to solve the water issues in agriculture and beyond.
water resources, water security, soil sealing, water pollution
THE IMPACT OF AGRICULTURE ON ECONOMIC GROWTH UNDER SUSTAINABLE DEVELOPMENT CONDITIONS
In the modern era, ensuring sustainable socio-economic development is regarded as one of the main priorities at both global and regional levels. The concept of sustainable development holds particular significance for ensuring a healthy, safe, and high standard of living for society. This development model aims, on the one hand, to preserve natural resources and, on the other, to establish a balance between human activities and the environment. The key principles of sustainable development include promoting economic growth, expanding social inclusivity, and protecting the environment. The simultaneous implementation of these principles is considered a fundamental condition for long-term and continuous progress. In this context, the study of the impact of agriculture on socio-economic development gains particular relevance. Agriculture plays a vital role not only in ensuring food security but also in increasing employment in rural regions. At the same time, the application of modern and innovative methods in this sector enables more efficient use of resources, enhances productivity, and contributes to maintaining ecological balance. Sustainable agricultural systems are not limited to the optimal management of natural resources such as land and water; they also play an important role in increasing economic activity and innovation potential in rural areas, promoting rural development, expanding social infrastructure, and strengthening the capacity to adapt to climate change. Moreover, the implementation of modern and innovative approaches in agriculture significantly contributes to both the efficient use of natural resources and the overall economic growth. For this reason, the application and improvement of sustainable development models in agriculture is considered one of the key directions of contemporary research.
dayanıqlı inkişaf, dayanıqlı kənd təsərrüfatı, iqtisadi artım, ərzaq təhlükəsizliyi, ətraf mühitin qorunması, məşğulluğun təmini
MAIN ASPECTS OF AZERBAIJAN'S RENEWABLE ENERGY POLICY
As a result of rapidly developing technologies, the continuous growth of the world's population and increasing living standards, the demand for energy is increasing day by day. Currently, the main share of global energy consumption still belongs to the fossil fuels. However, these fuels play a major role in the deepening of climate change by causing an increase in carbon emissions. The depletion of fossil fuels and their negative ecological effects on the environment are significantly increasing the interest of countries in renewable energy sources. In this context, international energy policies, which seek to ensure energy security as well as environmental sustainability, increasingly identify the promotion of renewable energy sources as a priority direction. Today, renewable energy is accepted by many countries not only as an alternative, but also as a strategic and environmentally necessary energy model. Azerbaijan is also among these countries. This article examines Azerbaijan's current renewable energy potential and analyzes the strategic importance of these sources in national energy policy. The scientific novelty of the research is that the article serves as a significant information base on the topic in terms of assessing renewable energy sources from an economic perspective and analyzing the development measures implemented in this area in Azerbaijan. The applied significance of the research is the correct determination of the place of renewable sources in the energy policy of Azerbaijan and the provision of scientific and practical contribution to the formation of priority directions in this area.
energy policy, renewable energy, green energy, solar energy, wind energy, hydroelectric energy
THE EFFECTIVENESS OF THE WIPO GLOBAL INNOVATION INDEX AS AN INNOVATION INDICATOR: ANALYSIS OF GII DATA FOR SOUTH CAUCASUS AND SELECTED LATIN AMERICAN ECONOMIES
This study presents a comprehensive and systematic analysis of the Global Innovation Index (GII) data for selected countries in the South Caucasus and Latin America over the period 2013–2023. A broad set of countries was included to allow for data normalization and ensure comparability of results across different innovation systems. The research examines the strengths and weaknesses of national innovation ecosystems and addresses the challenges of uniform cross-country comparisons by employing the GII as a standardized and internationally recognized framework. Drawing on advanced statistical techniques adapted from the European Commission’s European Innovation Scoreboard methodology, the study evaluates the performance of the selected countries, classifies them into innovation categories, and provides rigorous evidence-based insights for policy development. A distinctive contribution of this research lies in its comparative focus on two geographically and economically diverse regions, thereby generating novel and actionable policy implications for innovation-driven growth. The analysis further disaggregates the main components of the GII to reveal both their enabling factors and inherent limitations, and formulates context-specific recommendations. The study concludes by ranking the selected countries, offering valuable input for national and regional innovation policy design. To the best of the authors’ knowledge, this is the first study to systematically and explicitly compare the innovation performance of South Caucasus economies with that of Latin American countries.
Qİİ, innovasiya, Latın Amerikası, Qafqaz, innovasiya performansı
Safar Huseynov, Azar Huseynli, Emin Mustafayev
DETERMINING THE DEVELOPMENT POTENTIAL OF THE ELECTRICAL INDUSTRY
This article examines the role of the electrical engineering industry in the modern economy, the trends in its development, and the prospects forexpanding this sector in Azerbaijan. The electrical engineering industry is not limited to the production and distribution of electricity but also encompasses high-tech fields such as electronics, automation, communications, and household appliances. The development of this sector plays an important role in increasing the level of industrialization in the country, expanding knowledge-intensive production, and shaping a competitive economic structure. The analysis of international experience shows that the development of the electrical engineering industry in countries such as the United States, China, Turkey, and others is closely linked to government support, investments in research and development (R&D), innovation, and digitalization policies. According to global market data, the compound annual growth rate (CAGR) in this sector is around 7%, and by 2029 the global market volume is expected to reach USD 5.58 trillion. In Azerbaijan, the electrical engineering industry is still in its formative stage. In recent years, enterprises such as ATEF Group, STP Global Cable, Gök-Nur Bakı LTD, Alov Zavodu, and Taube Electronics have played an important role in the development of the sector. However, the product range remains limited, and dependence on imports is still high. The main challenges include the deterioration of production assets, a low level of innovation activity, a shortage of qualified personnel, and non-compliance of product quality with international standards.The state strategies “Azerbaijan 2020”, “Azerbaijan 2030”, and “Green Energy”, as well as industrial parks and investment promotion mechanisms, create an important foundation for the development of the electrical engineering industry. The article proposes several measures, including the development of a national program, strengthening the financing of local production, providing tax and customs incentives, attracting brand-name ompanies, and promoting innovation. The electrical engineering industry holds strategic importance for the diversification of Azerbaijan’s non oil sector, the transition to “green energy,” and the strengthening of the country’s economic independence.
elektrotexnika sənayesi, sənaye inkişafı, innovasiya, dövlət dəstəyi, qeyri-neft sektoru, yaşıl enerji, rəqabət qabiliyyəti
INDUSTRY 4.0 TECHNOLOGIES AND THE SUPPORT OF NATIONAL TECHNOLOGICAL INITIATIVES
Contemporary researchers analyzing social events and processes in society increasingly focus on digital technologies and the search for new forms of communication in human life. Despite differences in opinion, authors who consider the negative consequences of all revolutions have come to the conclusion that the Fourth Industrial Revolution - lacking clear criteria will significantly improve living standards and lead to fundamental transformations in production systems. While modern technologies help solve numerous problems, they also give rise to new ones, requiring society to adapt to new ways of life.
industry 4.0, fourth industrial revolution, transformation of the economy
STATE SUPPORT AND ITS IMPACT ON ECONOMIC GROWTH: THEORETICAL AND METHODOLOGICAL ASPECTS
The article comprehensively examines the state’s incentive policy and investment promotion mechanisms implemented since 2014 in the process of establishing and developing industrial zones in the Republic of Azerbaijan, focusing on their essence, objectives, and outcomes. The study highlights the role of industrial zones in economic diversification, reducing regional development disparities, and ensuring sustainable growth in the non-oil sector. As a result of the analysis, existing forms of state support for industrial zones— including tax and customs incentives, infrastructure provision, financial mechanisms, and institutional assistance—were summarized, systematized, and classified. Various theoretical and methodological approaches to the concepts of state support, state support expenditures, investment incentives, and investment incentive expenditures were comparatively analyzed, revealing their economic essence, interrelations, and spheres of impact. The article conceptually and practically explores the mechanism through which state support influences economic growth, identifying both direct and indirect channels such as increased investment activity, industrial expansion, job creation, technological modernization, and productivity enhancement. A scientific and methodological framework for evaluating the effectiveness of state support is proposed, along with measurable indicators and evaluation criteria. In addition, the structure, scope, and main sources of data required for empirical assessment—such as national statistical agencies, fiscal reports, and databases of industrial zone management bodies—are defined. The findings of the study hold significant scientific and practical value for improving industrial policy, ensuring efficient allocation of public resources, and maintaining sustainable economic growth.
industrial zones, state support expenditures, investment incentive expenditures, economic growth.
STIMULATION OF THE DEVELOPMENT OF SMES IN THE NON-OIL SECTOR OF AZERBAIJAN
The article provides a comprehensive analysis of the directions for stimulating the development of small and medium-sized enterprises (SMEs) in Azerbaijan’s non-oil sector. The author emphasizes that SMEs are a vital driving force of the modern economy, playing a strategic role in economic diversification, employment growth, regional development, export potential expansion, and the strengthening of innovation activities. By increasing economic flexibility, SMEs also make a significant contribution to improving social welfare and ensuring balanced economic growth. The study notes that as a result of economic reforms and entrepreneurship support measures implemented by the Government of Azerbaijan in recent years, the share of the non-oil sector in GDP has increased significantly compared to 2010, reaching 65–67%. The economic activity, regional influence, and innovative potential of SMEs have also been on the rise. However, several constraints still limit their development. Restricted access to financial resources, high lending interest rates, weak integration into technology and innovation, infrastructure shortcomings, a lack of management skills and human capital, as well as difficulties in accessing international markets, prevent SMEs from fully realizing their potential. The article identifies the main stimulating directions for overcoming these challenges. These include improving state support mechanisms, simplifying tax and administrative procedures, promoting digitalization and innovative initiatives, expanding export missions and international cooperation, and developing infrastructure and human capital, particularly in the regions. In conclusion, the stimulation of SME development is considered a crucial factor for ensuring Azerbaijan’s economic security, sustainable development, and social welfare. Strengthening SMEs will not only reduce the economy’s dependence on oil revenues but also transform the non-oil sector into a key driving force of the national economy.
SMEs, non-oil sector, support mechanisms, GDP, stimulation, innovation
CONSTITUTIONAL LEGAL BASIS OF ECONOMIC SOVEREIGNTY
In this article has been researched issues related to the constitutional legal basis of economic sovereignty Within the framework of the article, the relevance and essence of the concepts of "sovereignty" and "economic sovereignty" were commented on, economic relations were considered as an object of constitutional legal regulation, issues related to the doctrine of "constitutional economics" were included in the study, and then the constitutional legal guarantees of economic sovereignty were analyzed separately. According to the author, sovereignty is a political and legal principle that allows a state to resolve its internal and external issues independently of other countries and international organizations. In the article, economic sovereignty is characterized as the state's ability to freely and independently, without any external influence (interference), carry out its economic activities, manage its economic resources, and formulate and implement its own economic policy. Based on his research, the author comes to the conclusion that the Constitution, by establishing the economic foundations of the constitutional structure and basic economic rights and freedoms, has a regulatory effect not only on individual economic relations, but also on the economic system itself as a whole. İn the article has been given the definition of the constitutional legal guarantees of economic sovereignty and has been determined the scope of these guarantees (the declaration of fair economic and social rules, the mechanism for forming state authorities that perform economic functions, the authority to join international economic agreements and unions, exclusive rights over natural resources, etc.). The importance of increasing attention in our country to issues related to Constitutional Economics", which is developing as a new scientific direction and educational subject in the experience of countries of the world (USA, Germany, Austria, Poland, etc.), is emphasized.
sovereignty, economic sovereignty, constitution, economic relations, constitutional-legal regulation, constitutional economy,
GREEN URBANIZATION AND ITS CHARACTERİSTİCS IN POST-CONFLICT AREAS
The economic activity of people living in post-conflict areas and the state of support for this activity are directly related to the compliance of the cities being restored here with the requirements of green urbanization. The article outlines the attitude towards the factors that determine the environment for the development of green urbanization, and the requirements of green activities in urban planning implemented in post-conflict areas. The possibilities of implementing the principles of green urbanism during the Great Return are explored. The features of the implementation of the principles of green urbanization in the liberated territories of Azerbaijan have been identified. The directions for using the opportunities of publicprivate partnerships and the digital environment in supporting green urbanization in post-conflict areas are outlined. The purpose of the study is a preliminary theoretical and experimental characterization of the situation of using the advantages of green urbanism in Karabakh and Eastern Zangezur as a post-conflict space. Research methods: observation, comparative analysis, abstraction, logical generalization. The scientific novelty of the study lies in identifying the features of green settlement and green urbanization in Karabakh and Eastern Zangezur during the Great Return, as well as assessing the possibilities of green urbanism.
green urbanization, post-conflict areas, Karabakh and East Zangezur, urban planning, digital, public-private partnership.
Copyright (c) 2024 FEATURES AND PROBLEMS OF IMPLEMENTING ECONOMIC REFORMS IN AZERBAIJAN https://creativecommons.org/licenses/by-nc-nd/4.0
MONOPOLY AND CORRUPTION AS THE BASIS OF ECONOMIC INSTABILITY TURKIC-SPEAKING COUNTRIES
This topic is one of the most pressing issues across various state activities. The preamble of the UN Convention against Corruption broadly outlines the concerns, convictions, and determination to combat corruption. Monopoly and corruption are factors that undermine a state's economic and national security. They affect science, education, industry, social sectors, the economy, politics, diplomacy, and finance. This article addresses these issues that currently exist in Turkic-speaking countries. It is essential for us, Turks, to understand these issues because without knowing the true causes negatively affecting the development of all sectors in our countries and the lives of their populations, we cannot build a strong unified society of Turkicspeaking states. Only by understanding the real state of affairs in each of our countries can we achieve unity among our peoples and states, with flourishing science, education, social sectors, and democracy akin to that of European Community countries.
monopoly, corruption, science, education, social sector, banking, finance, societal destabilization, social environment, democracy, human rights, dictatorial regimes, investment activities,