For a long time, Azerbaijan’s economy was heavily dependent on the oil sector. Revenues from oil played a crucial role in the country’s economic development, providing a significant portion of its income. However, this reliance also made Azerbaijan’s economy vulnerable to global fluctuations in oil prices. To protect itself from such risks and ensure sustainable growth, the government decided to diversify the economy. A significant step in this direction was the series of reforms initiated in the late 2010s, which laid the foundation for the growth of non-oil industries.
Today, Azerbaijan is actively expanding its non-oil production, and this has already yielded noticeable results. One of the key indicators of the success of this policy is the increase in the share of the non-oil sector in the country’s GDP. While the economy was once almost entirely dependent on oil, by 2023, the situation had shifted: 63% of the GDP was generated by non-oil sectors, highlighting the correctness of the chosen path. Positive trends continued in 2024, with the economy growing by 4.3% in the first six months.
Attracting Investments and Industrial Growth
One of the most important factors contributing to the successful development of the non-oil sector is investment. In 2023, over 14 billion manats were directed into non-oil sectors, and this figure continues to grow. In the first half of 2024 alone, more than 5 billion manats were invested in the development of non-oil sectors.
Azerbaijan creates favorable conditions for attracting foreign investors. Tax incentives, customs relaxations, and special programs supporting small and medium-sized businesses allow investors to easily launch projects in the country. An important initiative has been the establishment of industrial parks, such as the Sumgait Chemical Industrial Park. These zones provide companies with modern facilities for production and export, which stimulates industrial growth.
Notable are the projects implemented in these industrial zones. The “Azerfloat” and “Azərsulfat” factories are prime examples of successful investment use. The “Azərsulfat” plant, which started production with investments of $6 million, not only fully meets domestic demand for sulfuric acid but also exports its products to countries such as Georgia and Russia.
Agriculture – The Backbone of Food Security
Agriculture is one of the key sectors of the non-oil economy and continues to play a vital role in ensuring the country’s food security. Azerbaijan benefits from favorable climatic conditions that allow the agricultural sector to thrive. In 2023, agriculture contributed 6.8 billion manats to the national economy, and in 2024, there has been a further 3% growth.
The government actively supports agricultural projects by creating agro-parks and agro-clusters. These initiatives are aimed at increasing agricultural production volumes and reducing dependency on imports. For example, agro-parks in Agdam and Jabrayil are already demonstrating excellent results, contributing to both internal production growth and expanding the country’s export opportunities.
Meat and egg production is also showing good progress. In 2023, meat production increased by 3.1%, while egg production grew by 8.4%. These figures indicate that agricultural programs are working successfully and that the country is strengthening its food independence.
Moreover, the establishment of processing enterprises has been a key step in strengthening Azerbaijan’s position in international markets. Local producers can now not only supply raw materials but also offer high-quality processed products, increasing their competitiveness on foreign markets.
Tourism – The New Face of Azerbaijan
Tourism has become one of the key sectors demonstrating rapid growth. In 2023, the tourism industry grew by 21.8%, with the added value reaching 2.684.5 million manats. The influx of tourists continued to rise in 2024, with the number of foreign visitors increasing by 30.2% compared to the previous year. This is no surprise, considering the country’s rich cultural and natural heritage. Azerbaijan offers tourists unique historical and natural attractions, and the government is actively investing in the development of tourism infrastructure. In 2023, more than 2 million tourists from 187 countries visited the country.
Tourism development includes not only cultural and natural routes but also business tourism. Thanks to Azerbaijan’s strategic location and political stability, the country is becoming an attractive destination for international events and business forums. Azerbaijan is actively developing the “Made in Azerbaijan” brand, which draws attention not only to its products but also to the country as a whole.
Digitalization – The Key to the Future
Another critical component of the non-oil sector’s development is the digitalization of the economy. In 2023, the information and communication sector grew by 12.2%, and this trend continues to gain momentum. The state is actively implementing programs aimed at digitalizing all sectors of the economy, from e-commerce to telecommunications.
Digitalization not only simplifies market access but also makes the economy more resilient and flexible. Azerbaijan is actively developing its logistics and digital infrastructure, attracting international investors and establishing itself as a technological hub in the region. Modern technological solutions are helping accelerate economic development and integrate the country into the global digital space.
The support programs for digitalization include not only creating new platforms for business but also improving existing services. This applies to both public services and the private sector, enabling Azerbaijan to remain competitive in a rapidly changing world.
Conclusion
Investment continues to play a crucial role in developing the non-oil sector. In 2023, more than 14 billion manats were invested in non-oil industries. In 2024, the trend of attracting foreign investments remains strong, enabling the country to actively develop new projects. Azerbaijan attracts foreign investors through favorable business conditions. Special support programs, tax incentives, and customs relaxations stimulate business growth. Programs supporting small and medium-sized enterprises help create jobs and stimulate internal economic growth.
Azerbaijan’s non-oil sector is the engine of the country’s future economic growth. Significant successes were achieved in this sector during 2023 and 2024, strengthening the country’s position on the international stage. Agriculture, industry, tourism, and digitalization are becoming key directions for further growth, with government support and investments playing a pivotal role in the development of these sectors.
In the future, Azerbaijan will continue to expand its export capabilities, attract foreign investments, and develop its domestic markets. The country aims to become a regional leader and is actively working to ensure that the non-oil sector forms the foundation of its long-term economic stability and prosperity.
