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
NEW TECHNOLOGİCAL AND İNNOVATİVE TRENDS OF THE POSTİNDUSTRİAL ERA İN AVİATİON TRANSPORT
The article analyzes the technological and innovative changes taking place in civil aviation in the post-industrial era. It is noted that the transition from an industrial society to a knowledge and service economy has led to the digitalization, automation and transformation of the aviation sector into a high-tech system. Innovations such as artificial intelligence, big data, digital twin technology, biometric identification and smart airports increase safety, operational efficiency and passenger comfort in aviation. The article also examines the environmental problems and decarbonization directions of the aviation industry. SAF fuels, electric and hydrogen-powered aircraft, the use of lightweight materials and route optimization are indicated as the main solutions for reducing carbon emissions. Considering that in the post-industrial era, aviation has become not just a mode of transport, but also a high-tech and digital management system, one of the most important changes here is the widespread application of artificial intelligence and automation. Through these technologies, flight planning, early detection of technical malfunctions and air traffic control are carried out more effectively. At the same time, problems such as the high financial cost of these technologies and the lack of infrastructure are also highlighted. At the same time, it is concluded that the aviation of the future is formed on three main principles: digitalization, sustainable development and human-technology integration. The author emphasizes that in the future, competitive advantage will be achieved by airlines and airports that adapt more flexibly to innovative technologies.
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MODERN APPROACHES TO STRATEGIC PLANNING IN THE HIGHER EDUCATION SYSTEM OF AZERBAIJAN IN THE CONTEXT OF ENVIRONMENTAL MANAGEMENT AND SUSTAINABLE DEVELOPMENT
The article examines modern approaches to strategic planning in the higher education system of Azerbaijan under the conditions of global environmental challenges, digital transformation of the economy, and the implementation of sustainable development principles. The study aims to identify the key factors influencing the effectiveness of strategic management in educational institutions and to determine promising directions for the development of environmental education. Theoretical foundations of strategic planning and management in higher education institutions are explored, and contemporary models of integrating environmental principles into the educational process and university governance systems are analyzed. Special attention is given to the role of higher education institutions in forming human capital equipped with competencies in sustainable development, environmental safety, and the green economy. The study investigates international experience in the greening of higher education, including the implementation of environmental management systems, the development of interdisciplinary academic programs, and the expansion of cooperation between universities, government institutions, businesses, and civil society organizations. The potential of digital technologies to enhance the quality of education, improve managerial decision-making, and develop an innovative educational environment is also considered. Based on the analysis, key challenges and limitations in the strategic development of environmental education in Azerbaijan are identified. Priority directions for improving strategic planning are proposed, including the integration of sustainable development principles into educational policy, the advancement of digital infrastructure, the strengthening of international cooperation, and the enhancement of specialist training for an environmentally oriented economy. The findings may be used in developing university strategies and improving national education policy.
Gazanfar Suleymanov Turkan Sheydai, Aidana B. Makatova, Mahir Kh. Zeynalov
THE VISIBLE MATERIALIZATION OF THE INVISIBLE ECONOMY: ECOLOGICAL AND ECONOMIC FOOTPRINTS OF PACKAGING
In the modern global economy, ensuring sustainable development is directly linked to the efficient use of resources and the reduction of ecological footprints. This research focuses on identifying environmentally friendly, high-performance, and result-oriented solutions for long-term and sustainable packaging. The packaging sector fulfills a strategic mission as a key link in the circular economy, rather than merely serving a protective function. Within the scope of the study, the technical qualities of various packaging types, their material composition, and their functional relationship with the "green" environment have been profoundly investigated. The primary task of packaging is to protect the product from external environmental impacts and ensure convenience in transport and logistics processes. However, the ecological consequences of traditional plastic-based materials now call their economic efficiency into question. The research results indicate that the use of nondamaging, recyclable, and biodegradable raw materials is both a positive advancement for the ecosystem and aligns with companies' corporate social responsibility strategies.
SECTORAL MANAGEMENT PROBLEMS OF THE SUSTAINABLE DEVELOPMENT OF THE BUSINESS SYSTEM IN THE KARABAKH ECONOMIC REGION
The article analyzes the formation of business systems and the impact of sectoral governance on economic development processes in post-conflict regions from both theoretical and practical perspectives. The main objective of the study is to evaluate the effectiveness of institutional governance models in post-conflict conditions and to identify optimal development approaches for the Karabakh Economic Region. Within the research, the post-conflict experiences of Bosnia and Herzegovina, Rwanda, and Colombia were comparatively examined, and the effects of governance models on economic recovery were assessed through cause-and-effect relationships. The findings reveal that the level of institutional coordination, consistency of public policy, promotion of local entrepreneurship, and integration of international support mechanisms are key determinants of economic development in post-conflict regions. The article systematically investigates the fiscal, monetary, and legal incentive mechanisms implemented in the liberated territories, as well as financial flows within the framework of the “Great Return” Program. Furthermore, infrastructure reconstruction, the establishment of logistics and industrial zones, the implementation of tax and customs incentives, and policies aimed at human capital development are evaluated as essential components of economic reintegration. The study also analyzes the impact of public investments on economic activity, the structure of financing sources, and the directions of investment flows based on statistical indicators. As a scientific contribution, the conceptual foundations of a phased and hybrid sectoral governance model for the Karabakh Economic Region are developed, proposing an approach based on the integration of centralized governance and local participation. The results of the study indicate that the expansion of the digital economy, the strengthening of institutional stability, and the optimization of investment incentives play a significant role in ensuring the region’s sustainable socio-economic development. The practical significance of the article lies in providing scientifically grounded recommendations for the formation of a sustainable business environment and the development of effective governance mechanisms in post-conflict regions.
THE ROLE OF INTERNATIONAL SPORTS EVENTS IN TOURISM MARKET DEVELOPMENT: GLOBAL EXPERIENCE AND IMPLICATIONS FOR AZERBAIJAN
This study examines the role of international sports events in shaping and developing tourism markets, focusing on global best practices and their applicability to Azerbaijan. A comparative qualitative research methodology is employed, involving an analysis of the Olympic Games, FIFA World Cups, and Formula 1 Grand Prix events hosted by various countries and destinations. The study explores how these events contribute to tourism growth, destination competitiveness, and international visibility. The findings indicate that international sports events generate both direct and indirect effects on the tourism sector. Direct impacts include increased visitor arrivals, higher tourism revenues, and greater demand for accommodation, transportation, and hospitality services during the event period. Indirect impacts involve enhanced destination image, stronger international recognition, infrastructure modernization, increased investment attractiveness, and the creation of long-term marketing opportunities. Furthermore, sports mega-events can contribute to local economic development and strengthen national identity by projecting a positive image of the host destination to global audiences. However, the sustainability of tourism growth depends largely on effective post event legacy management, the continued utilization of infrastructure, and the integration of event outcomes into broader national tourism and development strategies. The study concludes that although Azerbaijan has successfully positioned itself as a regional sports tourism hub, stronger strategic coordination among tourism, sports, infrastructure, and marketing stakeholders is necessary to maximize long-term tourism benefits, maintain competitive advantages, and ensure sustainable legacy outcomes.
THE IMPACT OF LOGISTICS COSTS ON EXPORT PERFORMANCE
In the modern era of rapid global trade development, the optimization of logistics costs has become one of the strategic factors determining the international competitiveness of both enterprises and national economies. The development of an efficient and effective logistics system within the national economy directly affects the operations, management, and financial performance of enterprises. The strategic location of the Republic of Azerbaijan as a primary transit hub between European and Asian transportation corridors offers a natural advantage for freight transport and logistics nodes, particularly with increasing trade opportunities as part of international supply chains.
DYNAMICS OF CHANGE IN THE POPULATION OF THE NAKHCHIVAN AUTONOMOUS REPUBLIC BETWEEN 1924-2024
Nakhchivan Autonomous Republic, being an integral part of the independent Republic of Azerbaijan, has passed through a rich historical path of development. The Nakhchivan Autonomous Republic is one of the regions of Azerbaijan distinguished by its unique demographic development characteristics. The article comprehensively analyzes the changes in the population size and structure of the Nakhchivan Autonomous Republic over a historical period of more than 100 years, as well as the impact of socio-economic and socio-political processes on demographic development. The study reflects the demographic dynamics and structural changes of the population during 1924–2024, covering socio-economic and socio-political events and presenting data related to the population of the autonomous republic over more than a century. In addition, the article analyzes indicators related to the urban and rural population, as well as the gender composition of the population, and investigates the changes that occurred in their numbers. The conducted research revealed that positive changes occurred in the population size of the Nakhchivan Autonomous Republic, and the population tended to increase over time. In particular, the socio-economic reforms implemented in the Nakhchivan Autonomous Republic had a positive impact on demographic dynamics. The article also includes information on the geographical location, administrative-territorial division, population density, ethnic composition, and average life expectancy of the Nakhchivan Autonomous Republic. In general, the results of the research indicate that despite the difficulties experienced during different historical periods, positive population growth trends have been observed in the Nakhchivan Autonomous Republic, which is an integral part of the independent Republic of Azerbaijan.
TECHNOLOGICAL STRATEGIES OF TRANSNATIONAL CORPORATIONS IN THE ELECTRICAL ENGINEERING PRODUCTS MARKET
This article examines the technological strategies of transnational corporations operating in the electrical engineering products market, as well as the role of research and development (R&D) in shaping their global competitive advantage. The primary objective of the study is to evaluate the determining factors of industrial leadership in the electrical engineering sector through a comparative analysis of the technological development models of “Intel,” “Samsung Electronics,” and “TSMC.” In the contemporary context, the advancement of artificial intelligence, 5G, the Internet of Things, and high-performance computing technologies has further intensified innovation-driven competition in the electrical engineering industry. According to the findings of the study, substantial R&D investments play a crucial role in achieving technological superiority; however, they are not sufficient on their own. Despite significant investment volumes, “Intel” has experienced a relative decline in its competitive position due to delays in manufacturing processes and limited organizational agility. “Samsung Electronics” has maintained a strong market position through a balanced innovation strategy and investments in HBM and DDR5 technologies. Meanwhile, “TSMC,” through its pure-play foundry model, early investments in advanced technologies, and a global customer network, has achieved higher efficiency and technological leadership. In the electrical engineering industry, sustainable competitive advantage depends not only on financial resources but also on strategic agility, effective innovation management, and integration into the global technological ecosystem.
THE ESSENCE OF THE SUSTAINABILITY OF THE BANKING SECTOR AND THE FACTORS INFLUENCING IT
In this article, the essence of the sustainability of the banking sector and the factors influencing it have been researched. The banking sector is one of the main pillars and most important components of a country's economy. According to the author, its sustainability is of vital importance for macroeconomic stability, the reliability of financial markets, and the overall investment climate. In the article, is emphasized the importance of implementing effective approaches against both internal and external risk factors in order to maintain the sustainability of the banking sector. In the article, both internal and external factors affecting the sustainability of the banking sector are analyzed, and the measures that banks should implement to ensure sustainability in the banking sector are also identified. It is argued that, in order to ensure sustainability in the banking sector, banks should formulate business models aligned with digitalization trends, improve governance and risk management mechanisms, strengthen capital resilience, diversify their credit portfolios, enhance customer trust, and accelerate the implementation of innovative banking products. The requirements, which are established in the current legislation in order to ensure that banks can operate reliably, are emphasized. The article also analyzes issues related to the methodology and indicators used to assess the financial stability of banks (bank capital, bank assets, bank income, liquidity, profitability, bank liabilities, bank management, etc.). Based on the fact that banks are public institutions and that banking activities have a public character, the sustainability of the banking system is also linked to the criterion of how well banks’ activities meet public needs. In conclusion, all the ideas presented and the research and analyses conducted within the article are summarized, and certain considerations are put forward.
ASSESSING THE IMPACT OF THE COUNTRY'S ELECTRICAL ENGINEERING INDUSTRY ON MEETING ECONOMIC DEMANDS
The emerging development characteristics of the global economy influence the operational strategies of market participants, as well as the management mechanisms and mindsets of executives. At the current stage of economic development, the orientation toward innovation has become a priority vector for the economic growth of every state. This trend is primarily reflected both in ongoing scientific research and in the practical operations of economic entities. Under contemporary economic conditions driven by industrialization policies, the electrical engineering industry- as the newest sector of mechanical engineering is considered the most pivotal field in terms of its potential capabilities and is widely utilized across all sectors of the national economy. The specific characteristics of the electrical engineering industry, which plays a crucial role in the economic life of our country amidst an intensifying competitive environment, along with the evaluation of its impact on meeting economic demands, define the relevance and timeliness of this research.
ECONOMIC ASSESSMENT OF GREEN CAMPUS TRANSFORMATION AT AZERBAIJAN TECHNICAL UNIVERSITY
This article investigates the economic efficiency, savings potential and institutional implementation mechanisms of energy efficiency measures and green technologies in higher education institutions using Azerbaijan Technical University (AzTU) as a case study. The research problem is that energy efficiency in universities is often treated as a set of isolated technical interventions, while the functional structure of energy consumption, investment feasibility, monitoring, governance and phased financing mechanisms are not sufficiently integrated into a single analytical framework. The study applies structural analysis, scenario-based assessment, simple payback calculations, energy and financial savings estimation, multi-criteria project prioritisation and a phased 2026-2030 roadmap approach. The findings indicate that AzTU’s electricity consumption increased from 2.184 million kWh in 2020 to 2.691 million kWh in 2025, while electricity expenditures increased from AZN 262.1 thousand to AZN 430.6 thousand. Total energy expenditure reached AZN 951.9 thousand in 2025. Preliminary calculations indicate a total energy savings potential of 12-18%. A 120 kW photovoltaic system can compensate for 6.3-7.1% of annual electricity consumption; achieving a 10-15% target would require expanding system capacity to approximately 250-300 kW. LED modernisation can generate annual savings of 100-150 thousand kWh, while a BMS pilot project may reduce heating and ventilation-related costs by 10-15%. The main contribution of the article is a measurable, phased and financially grounded green campus transformation model for AzTU.
Kamran F. Baghirov Yunis G. Gurbanzade, Kamin A. Mirzayev, Natiq Sh. Muradov
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
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.
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.