DOI kodi: 10.52340/ekonomisti.2026.01.09

Expanded Summary

Investments are widely regarded by economists as a key driver of economic development, innovation, and structural transformation. The primary objective of any investment activity is the generation of income and economic returns, whether through capital allocation to industry, infrastructure, or human capital.

Over the period of independence, Azerbaijan has established a comprehensive system of state regulation of investment processes, incorporating both legal and institutional instruments. The legislative framework governing investment activities has been consistently expanded and refined: over the past decades, the Milli Majlis of the Republic of Azerbaijan has adopted more than 400 regulatory legal acts, more than 100 of which directly regulate various aspects of investment activity.

Since the early years of independence, Azerbaijan has actively cooperated with leading international financial institutions, including the International Monetary Fund (IMF), the World Bank, the European Bank for Reconstruction and Development (EBRD), the Asian Development Bank (ADB), and the Islamic Development Bank (IsDB). This cooperation has played a significant role in supporting macroeconomic reforms, economic modernization, and improvements in the investment climate.

According to the State Statistical Committee of the Republic of Azerbaijan, during the period 2015–2024 the total volume of loans attracted from international organizations amounted to approximately USD 4.5 billion. While in 2015 this indicator reached USD 2.2 billion, by 2024 it had declined to USD 638.5 million, representing a reduction of approximately 3.5 times.

The attracted financial resources were primarily directed toward financing state development programs, liberalizing foreign trade, harmonizing customs, tariff, and tax systems with international standards, including those of the World Trade Organization (WTO), as well as improving the regulatory framework and enhancing the overall investment environment.

Foreign direct investment (FDI) continues to play a system-forming role in Azerbaijan’seconomic development, serving as a key source of long-term capital, technological modernization, and integration into the global economy. During the period 2015–2024, the cumulative volume of FDI attracted to the national economy amounted to approximately USD 41 billion.

In 2024, according to the State Statistical Committee of the Republic of Azerbaijan, the total volume of foreign investments in the national economy exceeded USD 7 billion, which was 4.5% higher than in 2023 (USD 6.7 billion). The sectoral distribution of investments remained largely unchanged: 79.3% were directed to the oil and gas sector, while 20.7% were allocated to non-oil industries. An analysis of the geographical structure of FDI inflows indicates that the largest investors in Azerbaijan’s economy in 2024 were the United Kingdom (USD 1.8 billion), Turkey (USD 1.2 billion), Hungary (USD 1 billion), Cyprus (USD 746 million), and the United Arab Emirates (USD 490 million).

At the same time, Azerbaijan’s investment activity is not limited to attracting capital, as the country has consistently developed a model of bilateral investment interaction and increasingly acts as an investor abroad.

A key role in Azerbaijan’s outward investment expansion is played by the State Oil Company of the Republic of Azerbaijan (SOCAR) and its subsidiaries. Over the past 15–17 years, the company has implemented multi-billion-dollar investment projects in hydrocarbon extraction, processing and transportation, petrochemicals, fuel production, and the development of fuel retail networks. The most significant destination for SOCAR’s foreign investments has been Turkey, where total investments in the national economy over the past 17 years amounted to USD 18.5 billion. These investments cover a wide range of projects, from oil refining to transport and logistics infrastructure.

At present, SOCAR’s subsidiaries operate, in addition to Turkey and Italy, in Georgia, Romania, Austria, Switzerland, the Netherlands, the United Arab Emirates, Malta, as well as in Kazakhstan, Ukraine, and Russia, which indicates the formation of a well-established international investment strategy.

In turn, Azerbaijan’s outward FDI in 2024 amounted to USD 1.8 billion. The top five recipient countries of Azerbaijani investments were the United Arab Emirates (USD 458 million), Turkey (USD 249 million), Georgia (USD 165 million), the United Kingdom (USD 111 million), and Uzbekistan (USD 93 million) [12] (Fig. 3). Traditionally, the most attractive sectors for Azerbaijani capital include energy, transport, trade, infrastructure networks, and the construction industry.

Domestic investments directed into Azerbaijan’s economy during the period 2015–2024demonstrated a stable positive trend. While in 2015 the volume of domestic investment amounted to USD 8.8 billion, by 2024 it exceeded USD 11 billion, corresponding to an increase of approximately 25.1%.

In recent years, public investment aimed at the restoration and socio-economic development of the liberated territories has gained particular importance within the structure of domestic investment. As noted by the President of the Republic of Azerbaijan, I. Aliyev, “from 2021 to the present, Azerbaijan has allocated more than 19 billion manats for the restoration of Karabakh and East Zangezur, and the implementation of the ‘Great Return’ program will remain a priority.”

The state’s investment policy is not only strategic in nature but also has a direct impact on the pace and quality of Azerbaijan’s economic growth. For a comprehensive assessment of this impact, several key areas should be considered.

First, the impact of foreign investment on GDP and overall economic growth dynamics. According to the State Statistical Committee of the Republic of Azerbaijan, during the period 2015–2024 the country’s GDP increased significantly, from AZN 54.4 billion to AZN 126.3 billion, representing growth of approximately 132%.

An important analytical aspect involves accounting for demographic changes: during this period, Azerbaijan’s population increased from over 9 million to 10.2 million people. Even taking demographic factors into account, GDP per capita rose from AZN 5.7 thousand to AZN 12.1 thousand in 2024, i.e., by more than 112%, indicating not only quantitative economic expansion but also qualitative improvements in the socio-economic well-being of the population.

Second, the impact of investment activity on employment. According to official statistics, in 2015, with GDP at AZN 54.4 billion, total employment amounted to 4.672 million people, whereas in 2024, with GDP increasing to AZN 126.3 billion, employment reached 5.03 million people. The approximately 7.7% increase in employment was primarily driven by investments in the modernization of production facilities, equipment renewal, the introduction of modern technologies, and the expansion of non-resource sectors of the economy.

Third, the impact of investment on household income levels. According to official data, in 2015 total household income amounted to approximately AZN 41.7 billion, while the average monthly wage was AZN 447. By 2024, these indicators had increased to AZN 83.1 billion and AZN 1,009, respectively. Thus, total household income doubled, while the average wage increased by 2.3 times, reflecting higher economic activity and improvements in the social dimension of economic growth.

Fourth, the role of strategic investment projects in shaping long-term economic growth. The foundation of Azerbaijan’s modern investment model was laid with the signing of the “Contract of the Century” in 1994 between Azerbaijan and 11 leading oil companies from seven countries for the development of the Azeri–Chirag–Gunashli fields. The implementation of this agreement ensured a large-scale inflow of FDI into the energy sector and marked the starting point for the formation of modern export and transport infrastructure.

Subsequently, the investment strategy was further developed: in 2017, an updated ACG contract was signed, extending oil production until 2050, and the Baku–Tbilisi–Kars railway was completed, becoming a key element in the revival of the historic Silk Road. In parallel, the international North–South Transport Corridor is being developed, while Azerbaijan’s participation in the “One Belt, One Road” initiative has significantly strengthened its transit and logistics potential.

Overall, the implementation of these strategic initiatives, combined with a well-designedinvestment policy, has contributed to strengthening the country’s energy and transport infrastructure, creating a substantial number of jobs, and enhancing the industrial potential of the national economy. Currently, Azerbaijan’s economic development priorities are gradually shifting from a resource-based model toward a sustainable and diversified growth model based on digitalization, the development of the green economy, and innovative production.