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Nazrin Abdul

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A new force has entered the arena of interstate competition: artificial intelligence. Where global influence was once defined primarily by military strength and economic power, today no serious strategic calculus is complete without AI. It is reshaping how nations compete, cooperate, and project influence. Azerbaijan is entering a pivotal phase in its digital evolution, where technology is positioned to make government more efficient as well as serve as a strategic lever for economic diversification, innovation, and national security. The recent establishment of the Digital Development Council and the approval of a three-year Action Plan by President Ilham Aliyev mark a decisive step toward institutionalizing digital transformation at the highest level of government. This move reflects a recognition that in the modern global economy, the ability to harness artificial intelligence (AI), manage data effectively, and maintain technological sovereignty is as critical to national competitiveness as traditional sectors like oil and gas.

In recent years, Azerbaijan has achieved measurable progress in digital infrastructure and e-governance. The launch of the Government Cloud, a centralized platform for state data and services, and the widespread adoption of the SIMA biometric digital signature, now used by more than four million citizens, demonstrate the country’s capacity to implement large-scale digital initiatives. These achievements contributed to Azerbaijan’s rise to 74th place in the 2024 UN E-Government Development Index, entering the “very highly developed countries” category. This progress reflects a clear correlation between centralized digital infrastructure and improved public service delivery, signaling that Azerbaijan is moving from basic digitalization toward integrated, citizen-focused governance.

However, digital infrastructure alone does not translate into innovation leadership. Azerbaijan’s 94th place in the Global Innovation Index highlights the persistent gap between technology deployment and the generation of sustainable innovation. Innovation ecosystems require not only advanced infrastructure but also high-quality human capital, flexible regulatory frameworks, access to finance, and robust research capabilities. Current limitations, including deficiencies in data management, insufficient high-performance computing resources for AI, and underdeveloped financial instruments such as venture capital and crowdfunding, constrain the country’s capacity to transition to a fully innovation-driven economy.

The 2026–2028 Action Plan addresses these structural gaps through a combination of technological, regulatory, and human capital initiatives. The introduction of unified data management and the “once only” principle will reduce bureaucratic redundancy, enhance data integrity, and enable proactive public services. Centralizing citizen and business interactions under the MyGov and MyGov Business platforms will create a more seamless interface with the state, facilitating predictive governance and data-driven decision-making.

Equally important are measures to stimulate private innovation, including legal recognition of venture financing and crowdfunding, support for angel investors who are individuals that provide early-stage funding and mentorship to startups in exchange for equity, simplified technopark residency, and incentives for local innovative products in state procurement. These interventions acknowledge that public infrastructure and regulatory modernization alone are insufficient; fostering entrepreneurship and attracting global talent are essential to building a sustainable innovation ecosystem.

These measures together form the backbone of an innovation ecosystem. Digital infrastructure and government modernization can create the environment, but innovation thrives only when financial mechanisms, mentorship, and market access exist. By combining venture capital, crowdfunding, angel investment, and technopark support, Azerbaijan is aiming to reduce early-stage funding gaps, encourage risk-taking, and accelerate the commercialization of new technologies. This is particularly important for sectors like AI, where startups require significant upfront investment for research and computing infrastructure before generating revenue.

A particularly strategic component of the Action Plan is the emphasis on “sovereign AI,” a concept that is rapidly gaining global prominence. Countries around the world are pursuing sovereign AI to secure technological independence and strategic advantage. China, for instance, has made significant advances through its New Generation Artificial Intelligence Development Plan, aiming to establish global leadership in AI by 2030. The European Union (EU) is promoting data sovereignty via initiatives. Similarly, India and Russia are exploring sovereign AI strategies, focusing on data localization and the creation of AI solutions tailored to national priorities.

Sovereign AI refers to a nation’s ability to develop and operate AI systems using domestic infrastructure, data, and human capital, independently of foreign platforms. For Azerbaijan, this is both an economic necessity and a matter of national security. For example, developing AI models in the Azerbaijani language ensures that critical decision-making tools reflect local norms, cultural context, and legal frameworks. Achieving this, however, demands substantial investment in high-performance computing, data quality enhancement, and the cultivation of specialized talent, areas where current capacity is still limited.

As digitalization advances, cybersecurity risks grow proportionally. AI-driven cyberattacks, supply chain vulnerabilities, and threats to critical information infrastructure are becoming more sophisticated. The World Economic Forum identifies cybersecurity risks and technology-driven disinformation among the most pressing global threats. Against this backdrop, digital resilience, the ability to anticipate, respond to, and rapidly recover from cyber incidents, is equally vital as the development of AI and digital infrastructure. The State Service for Special Communications and Information Security is taking proactive steps by defining AI security requirements, creating a national “Threats and Solutions Catalog,” and establishing systematic risk assessment protocols. By emphasizing asset identification, regular review cycles, and adaptive risk management, Azerbaijan is embedding international best practices into its cybersecurity governance framework.

Taken together, the establishment of the Digital Development Council and the Action Plan represent a structured approach to advancing digital transformation in Azerbaijan. The country is moving from basic technology adoption toward more coordinated technology governance, with a focus on innovation and greater control over digital infrastructure.

These reforms have the potential to support economic diversification, improve public sector efficiency, and enhance cybersecurity. However, achieving these outcomes will require sustained investment in infrastructure, human capital, data management, private sector participation, and institutional coordination. Partial implementation or insufficient resources could result in only incremental improvements, limiting the impact of the Action Plan.

Azerbaijan’s new digital strategy presents both opportunities and challenges. It provides a framework to use AI and digital technologies to support economic development, improve governance efficiency, and strengthen cybersecurity. At the same time, it requires the development of technical infrastructure, financial mechanisms, and human capital to ensure a resilient, innovative, and sovereign digital ecosystem. The effectiveness of the strategy will depend on the country’s ability to implement these measures consistently and translate policy initiatives into measurable results within the global digital economy.