Azerbaijan’s Place in the World
Azerbaijan’s strong economic development, political stability, and commitment to dialogue and cooperation are dramatically changing the country’s international standing. Regionally, on the back of its economic power, it has become a key driver for further integration. Azerbaijan accounts for roughly 80 percent of gross domes-tic product (GDP) of the entire South Caucasus and attracts more foreign direct investment than any other country in the region. “Azerbaijan’s geographical location and economic potential require us to be an active player in the regional integration process,” says Elmar Mammadyarov, Minister of Foreign Affairs. “Occupying a cross-road between East and West, we have a long-standing tradition of building bridges between people and societies."
In the wake of developing its hydrocarbon sec-tor, Azerbaijan has established close links and economic ties with neighboring states and other countries in the region. It participates in numer-ous regional organizations and encourages closer cooperation. “Azerbaijan has been behind a number of regional projects, especially in the field of energy, transport and information communication tech-nologies,” explains Mammadyarov. “Construction of the Baku-Tbilisi-Jeyhan oil pipeline paved the way for the completion and successful launch of the Baku-Tbilisi-Erzurum gas pipeline, as well as the Baku-Tbilisi-Kars railroad project and the Trans-Eurasian Information Super Highway.”
What holds true regionally also applies inter-nationally. Azerbaijan is proving a reliable and committed partner, strengthening bilateral relations, and participating in international organi-zations such as the Organization for Security and Co-operation in Europe (OSCE), the Council of Europe, the Non-Aligned Movement, and the Organization of Islamic Cooperation (OIC). In 2011, Azerbaijan was elected a non-permanent member of the United Nations Security Council, reflecting its international credibility.
While Azerbaijan continues to deepen relations with key partners, it also seeks closer politi-cal and economic cooperation with countries in Southeast Asia, Latin America, and Africa, where the Azerbaijan International Development Agency of the Ministry of Foreign Affairs also imple-ments humanitarian projects. Azerbaijan thus strengthens its international clout. In the words of Mammadyarov, “Azerbaijan’s development in recent years across all areas and its growing influ-ence at the global level speak for themselves.”
A Home for Major Investments
Azerbaijan’s strong economic growth in the last two decades would have been impossible without foreign investment. The country’s economic success is attributable to an open-door policy that invites investors to participate in the development of key sectors, including the lucrative hydrocarbon sector. This attitude prevails and has made Azerbaijan a preferred destination for foreign direct investment. “Political and economic stability, protection of investor’s rights, favorable geographical location, abundant natural resources and a highly skilled workforce have made Azerbaijan one of the most attractive countries in the region for foreign investments,” says Elmar Mammadyarov, Minister of Foreign Affairs.
Between 1996 and 2013, the country attracted more than $100 billion in foreign investment. In 2013 alone, investments amounted to $10.5 billion. Traditionally, investment was directed at the oil and gas sectors, which continue to create significant opportunities. But Azerbaijan’s economy is diversifying. As Sahil Babayev, Deputy Minister of Economy and Industry, confirms, “diversification of non-oil sectors is our primary goal and we have already achieved results. Compared to 2007, when 60 percent of GDP was generated by the oil sector, this has now been reduced to 43 percent.”
Opportunities exist in a variety of sectors, including in particular agriculture, alternative energy, food processing and packaging, industrial production, information technology and telecommunications, logistics and transportation, and tourism.
A string of reforms has contributed to raising Azerbaijan’s attractiveness. The social, economic, and legal conditions of investment are clearly defined, the business registry system has been greatly simplified, and mechanisms are in place to protect the rights of investors. Azerbaijan offers a very liberal environment for investment and a range of special incentives.
Regionally, Azerbaijan creates additional opportunities through integration, as Mammadyarov explains. “There is a strong will and financial commitment from the our side to implement economic projects of regional importance, especially in the fields of energy, ICT and transport, connecting continents, regions and countries by pipelines, rail and roads, and promoting economic development of our region.”
Azerbaijan’s strategic location makes it an ideal hub and transit route for intercontinental trade and transportation. The country has invested heavily in building and expanding its road, rail, air and sea infrastructure. In the last decade, Azerbaijan has built four international airports and added more than five thousand miles to its road network. And this was only the beginning. Apart from ongoing work at Baku international airport for a new terminal with an annual capacity of three million passengers, one of Azerbaijan’s biggest projects is the Baku-Tbilisi-Kars railway. Also known as the ‘Iron Silk Road’, the project will connect the railway systems of Azerbaijan, Georgia, and Turkey with those of Europe and Asia.
“The Baku-Tbilisi-Kars railway project will be one of the most efficient transport corridors in terms of distance, speed and tariffs. It will not only contribute to internal cargo shipping, but also benefit Azerbaijan’s role in transit cargo shipping,” says Ziya Mammadov, Minister of Transport. Another major development under way is the construction of a new port facility. “The new Baku International Sea Trade Port will become the biggest seaport in the Caspian region and should be considered as a continuity of the Baku-Tbilisi-Kars railway project,” says Mammadov. Eventually, the new port will have an annual capacity of twenty-five million tons of cargo or one million containers. The eagerly awaited project is expected to be completed by 2017 and will further enhance Azerbaijan’s regional importance.