International Review: Republic of Azerbaijan

14 August 2025

In the new material of International Review series, we will talk about one of the most urbanized countries in the Transcaucasus, where over 50% of the population lives in cities, and according to UN projections, the urban population will exceed 70% by 2050. The capital city of this country has a population of over 2.5 million. We will talk about the Republic of Azerbaijan.

Azerbaijan is a country with a rich history and culture, located in the eastern part of the Transcaucasus on the shores of the Caspian Sea. The official language is Azerbaijani. The territory of the country is 86,600 sq. km, and its capital is Baku. Azerbaijan's population is over 10 million. The national currency is the Azerbaijani manat. The government is a democratic, legal, secular, unitary republic, administratively divided into 67 districts, 11 cities of republican subordination, and one autonomous republic — Nakhchivan.

Interesting fact: Azerbaijan is often called the "Land of Fire" due to its rich oil and gas reserves, as well as a unique natural phenomenon – the burning mountain Yanar Dag, where natural gas constantly comes to the surface and burns.

The country borders Russia, Georgia, Armenia, as well as Iran and Turkey via the Nakhchivan Autonomous Republic, playing an important role as a transit hub between Europe and Asia due to its geographic location and developed transport infrastructure.

The country gained independence in 1991 after the collapse of the Soviet Union. Azerbaijan is a member of the UN, the Council of Europe, and the Organization of Turkic States.

Baku is the capital and largest city of Azerbaijan, located on the southwestern coast of the Caspian Sea, on the Absheron Peninsula. It is an important industrial, economic, scientific, and technical center of the Transcaucasus, as well as the largest port on the Caspian Sea. The city is known for its rich history, blending ancient traditions and modern architecture, and its unique atmosphere, which combines East and West.

Interesting fact: Baku lies 28 meters below sea level. For comparison, Amsterdam is only a meter below this level. Of all the capitals, Baku is closest to the Earth's core. And this fact has been scientifically proven.

ATTRACTIONS

Icheri Sheher is the historical center of Baku, surrounded by imposing fortress walls, featuring the Palace of the Shirvanshahs and the Maiden Tower. In 2000, it was added to the UNESCO World Heritage List.

The Maiden Tower (Gyz Galasy) – an ancient defensive structure, is a unique architectural monument and one of the most recognizable symbols of Baku.

The Palace of the Shirvanshahs is the former residence of the rulers of Shirvan, which includes palace buildings, mosques, mausoleums, baths, and a divankhane (meeting hall).

The Flame Towers, three flame-shaped skyscrapers towering over the city, are also a modern symbol of Baku. Each of the three towers has its own function: a residential tower, an office tower, and a hotel. Their unique flame-like design is no coincidence. Azerbaijan is called the "Land of Fire" due to its rich oil and gas reserves, as well as the historical fire cults prevalent in the region. The Flame Towers are thus a symbolic reflection of the country's historical and cultural heritage, as well as its economic prosperity.

Interesting fact: Baku was the fifth city in the USSR to get a metro system. Before that, metros only existed in Moscow, Saint Petersburg, Kyiv, and Minsk. The Baku Metro has three lines and 26 stations.

ECONOMICS

Azerbaijan's economy relies heavily on oil and gas production and export, which account for a significant portion of the country's GDP and export revenue. However, the government is pursuing an active economic diversification policy aimed at developing industry, tourism, information technology, and agriculture.

Azerbaijan's industry includes oil and gas, petrochemicals, metallurgy, food processing, and textiles. Agriculture specializes in the cultivation of cotton, fruits, vegetables, tea, and grapes.

According to the 2024 results, Azerbaijan ranked fifth among the CIS countries by nominal GDP. In 2024, GDP grew by 4.1% compared to the previous year and amounted to $74.3 billion. Industry accounted for 35.9% of GDP, trade and transport services accounted for 10.7%, logistics accounted for 7%, construction accounted for 6.7%, agriculture and forestry accounted for 5.7%, information and communications accounted for 1.9%, and other sectors accounted for 19.9%.

The average annual inflation in Azerbaijan in 2024 was 2.2%, and the unemployment rate decreased to 5.3%.

WHAT IS PRODUCED IN AZERBAIJAN

Agriculture. The Azerbaijani government has identified agriculture as a priority sector for economic diversification. Agriculture is the country's largest employer, employing 37% of the population, but accounts for only about 7% of GDP. Azerbaijani products are highly recognizable in the markets of post-Soviet countries. The government supports the agricultural sector through grants, tax breaks, and subsidies for the purchase of machinery, pesticides, and fertilizers.

Thanks to its unique climatic diversity (9 of the world's 11 climate zones), the country cultivates a wide range of products, from subtropical fruits to grain crops. The main sectors are crop production and livestock farming. Cotton, grains (wheat and barley), fruits and vegetables (apples, pomegranates, tomatoes), grapes, tea, and nuts play an important role in crop production. Livestock farming includes cattle, sheep, and goat breeding, poultry farming, beekeeping, and fish farming, particularly sturgeon breeding.

Azerbaijan is a historic wine-growing region. Today, the country is actively reviving the industry, particularly in Sheki, Ganja, and Shamkir. The main export markets are Russia, China, and Europe.

Interesting fact: Azerbaijan is one of the world's leading producers of pomegranates (approximately 200,000 tons per year) and saffron.

Oil and gas production and refining. The oil and gas sector remained a key driver of Azerbaijan's economy in 2024, ensuring currency market stability and a foreign trade surplus. Azerbaijan is a major oil and gas producer in the Caspian region, with the main production coming from the “Azeri-Chirag-Guneshli” fields and the “Shah Deniz” gas condensate field. Oil production in Azerbaijan is gradually declining due to the natural depletion of older fields, but efforts are being made to maintain production levels. Gas production remains stable and tends to increase, primarily due to the development of “Shah Deniz” and the “Southern Gas Corridor”.

An interesting fact: The Nobel Prize emerged thanks to Baku oil. It was in the capital of Azerbaijan in the late 19th century that the Nobel Brothers established their first oil production enterprise. One of them - Adolf - became the founder of this prestigious prize, bequeathing at least 12% of the wealth earned from Baku oil for its payments.

Industry. Oil and gas refining are the foundation of Azerbaijan's industry. However, in recent years, the economy has been actively diversifying, including the development of renewable energy sources such as wind energy, solar energy, and bioenergy. Manufacturing includes machinery, metallurgy, chemical industry, and production of construction materials. Food industry, cotton production, and electric power also play a significant role.

Azerbaijan actively participates in the OPEC+ agreement, regulating its production in accordance with established quotas and attracting foreign investment in the development of new fields and infrastructure modernization. The Heydar Aliyev Baku Oil Refinery is the country's main oil refinery enterprise.

In 2024, Azerbaijan significantly increased its gas exports, reaching 25 billion cubic meters, a 5.8% increase over 2023, with more than half of this volume supplied to Europe. The main buyers were Italy, Greece, Bulgaria, Romania, Hungary, Serbia, Slovenia, Croatia, Slovakia, and North Macedonia. At the same time, oil exports decreased slightly compared to the previous year, amounting to 24.4 million tons, which is 3.2% less than in 2023. The main buyers of Azerbaijani oil are Italy, Turkey, Greece, Georgia, and Bulgaria.

TRADE

Azerbaijan's foreign trade turnover in 2024 decreased by 7% to $47.6 billion. At the same time, exports amounted to $26.6 billion (a 21.7% decrease), while imports were $21.1 billion (an increase of 21.8%). The main export item of Azerbaijan in 2024, as before, remains oil and gas sector products, accounting for approximately 90% of total exports. In monetary terms, this amounts to $23.1 billion, of which $7.6 billion comes from gas exports.

Main export items:

oil and gas
fruits, nuts, citrus fruits
plastics
precious stones and metals
cotton
vegetables and root crops
aluminum
vehicles
organic chemicals

Main import items:

food products
pharmaceutical products
ferrous metals and products made from them
plastics and products made from them
machinery and equipment
vehicles and spare parts

Azerbaijan's main trading partners are Italy, Turkey, Russia, the Czech Republic, Croatia, Germany, India, Israel, Bulgaria, and Georgia.

THE LARGEST COMPANIES IN AZERBAIJAN

SOCAR (State Oil Company of the Azerbaijan Republic). The state-owned oil and gas company of Azerbaijan, engaged in the exploration, production, refining, and distribution of petroleum products. It operates internationally and plays a key role in pipelines such as the Baku-Tbilisi-Ceyhan (BTC).
Azercell Telecom. The leading mobile operator in Azerbaijan, providing mobile communications, internet, and digital services. Azercell holds the largest market share in the country.
BP Azerbaijan. A major player in Azerbaijan's energy sector, BP operates key oil and gas projects, including the “Azeri-Chirag-Guneshli” field and the “Shah Deniz” gas field.
PASHA Bank. One of the largest private banks in Azerbaijan, offering corporate and investment banking, as well as retail banking through its subsidiary Kapital Bank.
Baku Steel Company. One of the largest steel producers in the region, manufacturing steel products for construction and industrial use.
BRAVO. A major retail supermarket chain in Azerbaijan. It offers a wide range of products, including food, household goods, household chemicals, and other categories.
Azerbaijan Airlines (AZAL). The national airline, operating domestic and international flights.
AzerGold. An Azerbaijani state-owned company involved in geological exploration, mining, processing, and exporting of precious and non-ferrous metals. The company specializes in the extraction of gold, silver, and other metals, as well as the production and sale of bars and coins made of precious metals.
Silk Way Airlines. A major cargo airline based in Baku. It specializes in regular and charter cargo transportation worldwide, including Europe, Asia, and the Middle East.
"Baku worker" machine-building plant. Specializes in the production of equipment, tools, and spare parts for the oil and gas and petrochemical industries, including drilling rigs, lifting cranes, and oil production equipment.

TOURISM

Tourism in Azerbaijan has demonstrated steady growth in recent years, facilitated by the country's strategic location at the crossroads of Europe and Asia, its rich cultural and historical heritage, its diverse natural landscapes, and active government support. After gaining independence, Azerbaijan gradually began to reveal its tourism potential, but a real breakthrough has occurred in the last two decades due to large-scale infrastructure projects, visa facilitation (e-visas for citizens of 95 countries), and active promotion on the international scene and through digital platforms.

One of the key factors in the growth of tourism has been the development of Baku as a modern metropolis while preserving its historical character. The Old City (Icheri Sheher), new architectural landmarks such as the Flame Towers and the Heydar Aliyev Center, as well as the hosting of major international events (the European Games 2015, The 2019 UEFA Europa League final and Formula 1 stages) have significantly increased the country's recognition. Simultaneously, infrastructure is developing: new hotels are being built, airports are being reconstructed (especially in Baku, Ganja, and Nakhchivan), and the road and public transport networks are expanding.

The diversity of tourist destinations plays an important role. Besides the capital, popular destinations include Guba with its mountain villages and apple orchards, Sheki with the Sheki Khan's Palace and its unique culture, Ganja as one of the oldest cities, Nakhchivan with its historical monuments and health resorts, the sandy beaches of the Caspian Sea, the mountain trails of the Greater Caucasus, the mud volcanoes of Gobustan, and the thermal springs of Lankaran.

Interesting fact: Azerbaijan is a hotspot for mud volcanoes. More than 300 of the 800 mud volcanoes on Earth are located around Baku.

Additionally, niche tourism is developing: gastronomic (with an emphasis on national cuisine), medical (naphthalan oil, mineral waters), ecotourism, and winter sports in mountainous regions.

Interesting fact: In Naftalan, they treat with oil that does not burn but has healing properties.

The number of foreign tourists who visited Azerbaijan in 2024 exceeded 2.6 million people, which is 25.9% more than in 2023. In total, citizens from 196 countries worldwide visited Azerbaijan last year. The tourism sector contributed 4.5% to Azerbaijan's GDP in 2024, and this positive trend is expected to continue in the coming years.

FREE ECONOMIC ZONES

Azerbaijan has special economic zones created to attract foreign investment and support international business. A key entity responsible for the development of these zones is the Azerbaijan Special Economic Zones Administration, which regulates their operation in accordance with national economic policy.

Currently, several free economic zones are operating in Azerbaijan:

Alat Free Economic Zone – with an area of 4,310 hectares, located near the Baku International Sea Trade Port. Focused on logistics, trade, and industry;
Baku High-Tech Park – designed for IT companies and startups, offering special conditions for the development of innovative projects;
Sumgayit Chemical Industrial Park – located in the city of Sumgayit, it focuses on developing the chemical industry and related sectors.

In addition, the Azerbaijani government plans to create new specialized zones, for example, for the development of tourism or agriculture, which will help to diversify the economy and attract additional foreign investment.

COOPERATION OF FEZ GRODNOINVEST AND AZERBAIJAN

In 2024, the trade turnover volume of residents of the FEZ "Grodnoinvest" with Azerbaijan amounted to over $25 million, increasing by more than 25% over the year. The basis of the trade turnover volume (over 97%) consisted of exports from the FEZ residents to Azerbaijan. Goods worth $0.7 million were imported from Azerbaijan by the residents.

The main export positions of the SEZ "Grodnoinvest" residents to Azerbaijan:

timber
fiberboard
chipboard
plywood
wooden furniture
hosiery
cable and wire products
canned meat
generators

COOPERATION OF BELARUS AND AZERBAIJAN

Belarus and Azerbaijan are actively developing cooperation in all areas of mutual interest. On June 11, 1993 diplomatic relations between the countries were established. There has been a strengthening of bilateral ties in the trade and economic sphere in recent years.

Countries actively trade with each other, engaging in mutual supplies of goods. Belarus exports a wide range of products to Azerbaijan, including vehicles, agricultural machinery, food products, wood products, and chemical products. In turn, Azerbaijan supplies Belarus with oil products, vegetables, and fruits. The countries are implementing joint projects in the fields of industry, construction, transport, and logistics.

Beyond trade, Belarus and Azerbaijan cooperate in the area of investments. Belarusian companies are involved in the implementation of projects in Azerbaijan, particularly in construction and infrastructure. Azerbaijan invests in the Belarusian economy, including projects in real estate and agriculture.