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Ulviyya Poladova

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In June, President Ilham Aliyev signed a decree introducing a new mechanism of state support for the export of non-oil and non-gas products. The initiative provides reimbursement of customs clearance expenses for micro, small, and medium-sized enterprises (SMEs) exporting their goods abroad. The support will be administered by the Ministry of Economy on a quarterly basis following applications submitted by exporters.

The measure represents another step in Azerbaijan's broader strategy to diversify its economy and reduce its reliance on hydrocarbons. Over the past decade, the government has consistently emphasized the development of the non-oil sector as a key driver of sustainable economic growth. Against this backdrop, the new incentive is designed to strengthen the competitiveness of domestic producers and encourage greater participation in international trade.

At first glance, the measure may appear technical in nature. However, it represents another important step in Azerbaijan's long-term strategy to diversify its economy, strengthen the private sector, and transform the country from a resource-dependent economy into a competitive producer and exporter of value-added goods.

Azerbaijan has implemented a broad range of measures aimed at stimulating non-oil exports. Export incentives for producers have been introduced, concessional lending programs for businesses have been expanded, Azerbaijani trade houses have been established abroad, export missions have been organized, and large-scale investments have been directed toward industrial parks, industrial zones, and agroparks.

The results of these efforts are becoming increasingly visible. According to official data, Azerbaijan's non-oil exports have almost tripled over the past ten years. In 2020, the country's non-oil exports amounted to approximately $1.9 billion. By the end of 2025, that figure had reached $3.6 billion, nearly doubling within just five years.

Particularly strong growth has been recorded in agricultural products, food processing, chemicals, aluminum and aluminum products, as well as electricity exports. These sectors are gradually becoming important contributors to Azerbaijan's export portfolio and reducing the economy's dependence on hydrocarbon revenues.

Speaking at the Azerbaijan Investment Outlook Forum held during the Annual Meetings of the Islamic Development Bank Group in Baku, Economy Minister Mikayil Jabbarov highlighted the role of reforms in creating a more attractive investment and business environment.

According to the minister, consistent reforms implemented in recent years have strengthened investment protection, simplified business procedures, expanded access to state support, and promoted public-private partnerships.

Particular attention, he noted, has been given to developing a strong SME sector, improving access to finance, supporting export-oriented growth, and building modern industrial infrastructure.

For many companies, especially first-time exporters, such support may improve profitability and encourage expansion into new markets. Importantly, the measure also complements broader support mechanisms already in place.

As Jabbarov noted, existing policies cover part of logistics and transportation costs, increase the competitiveness of local products, and facilitate access to new export destinations. These efforts are supported by improved credit guarantee systems and interest subsidy mechanisms, making sectors such as manufacturing, logistics, agriculture, services, renewable energy, and digital technologies more attractive for investors.

Over the past decade, Azerbaijan has invested billions of dollars in transport infrastructure. The modernization of highways and railways, the development of the Port of Baku, and the expansion of logistics centers have significantly strengthened the country's position along major Eurasian trade routes.

As geopolitical changes reshape global supply chains, Azerbaijan's role within the Middle Corridor linking Asia and Europe has become increasingly important. Cargo volumes moving through the country continue to grow, and Baku is positioning itself as a major logistics and transit hub connecting East and West.

The government's strategy increasingly reflects this interconnected approach. Investments in infrastructure are being accompanied by measures that stimulate production, exports, and private-sector development. Together, these policies create an ecosystem capable of supporting long-term economic diversification.

Perhaps the most telling indicator of this transformation was highlighted by Minister Jabbarov during a recent interview with AZERTAC and İTV. According to him, more than 71 percent of Azerbaijan's economy now belongs to the non-oil sector, while the oil and gas industry accounts for less than 30 percent.

The minister emphasized that the policies pursued over the past twenty years have led to a significant structural transformation of the economy. This progress has been achieved despite numerous external shocks, including periods of volatility in global energy markets and one of the most significant currency devaluations in Azerbaijan's modern history.

The fact that the non-oil sector now accounts for the majority of economic activity suggests that diversification efforts are producing tangible results. Nevertheless, challenges remain.

Non-oil exports still represent a relatively modest share of total exports compared to hydrocarbon revenues. Expanding the export capacity of domestic industries will require continued investment in innovation, workforce development, technology adoption, and international market access.

Furthermore, global competition remains intense. Azerbaijani producers must compete not only on price but also on quality, efficiency, and compliance with international standards. Therefore, export subsidies and reimbursements should be viewed as part of a broader strategy rather than a standalone solution.

As non-oil exports continue to expand and the private sector gains strength, Azerbaijan's economic model is gradually evolving. The country's experience demonstrates that diversification is a long-term process requiring coordinated policies, strategic investment, and consistent government support.