Azernews.Az

Elnur Enveroglu

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There is a revealing tension at the heart of Azerbaijan’s economic story. The country is still an energy exporter, and oil and gas remain central to its external trade. However, the investment message coming from Baku is increasingly about what comes after the first phase of energy-driven development.

President Ilham Aliyev used the 2nd Azerbaijan International Investment Forum to make that case. Speaking at an event themed “Restoring Trust in a Fragmented World”, he presented diversification as a process already underway.

President Aliyev said the non-oil and gas sector now accounts for more than 70 per cent of GDP. Why we mention it, because the numbers matter. At the same time, he acknowledged the harder part of the transformation: energy resources still make up the overwhelming majority of exports, and the challenge, therefore, is no longer simply to build a non-oil economy, but to make that economy competitive enough to sell more of what it produces abroad.

Certainly, diversification is not achieved simply by changing the composition of GDP. It requires companies capable of competing in foreign markets, infrastructure capable of moving goods efficiently and investors willing to commit capital to sectors beyond hydrocarbons.

President Ilham Aliyev put the challenge plainly: “So diversification of economy is already a reality, but we have to continue, definitely.”

This is where Azerbaijan’s investment proposition is becoming more interesting. The country is trying to turn advantages that once supported its energy economy into assets for a broader economic model.

Let's take geography, where obviously it is impossible for Azerbaijan to change its position between Europe and Asia, but it can invest in making that position economically useful. Roads, railways, ports and logistics infrastructure are being developed around the East-West and North-South corridors. The Middle Corridor, in particular, gives Azerbaijan an opportunity to become more than a transit point: it can develop logistics, warehousing, manufacturing and services around the movement of goods.

The same logic applies to energy, in a sector where Azerbaijan’s experience in building complex international energy infrastructure is now being extended into renewables. President Aliyev said contracts already signed with international and local companies would provide eight gigawatts of solar and wind capacity by 2032, while work is underway on transmission infrastructure to connect future electricity exports with markets, particularly in Europe.

Then there is agriculture, food security, the Alat Free Economic Zone, digital transformation, artificial intelligence, infrastructure and human capital. All of what is mentioned is not an isolated project, but on the contrary, together they suggest an attempt to build several new investment channels around an economy that historically drew much of its international capital towards hydrocarbons.

Besides, the scale of previous investment gives this strategy a foundation. The President of Azerbaijan said the country had attracted more than $350bn in direct investment over the past two decades, almost half from foreign sources. He argued that the next stage should build on the investment climate, infrastructure, legal framework and completed projects that helped bring that capital into the country. And of course, this is also where the real test begins.

Investors will not come simply because diversification is declared a priority. They will look for commercially viable projects, predictable rules, access to markets, skilled workers and reliable infrastructure. Azerbaijan itself recognises this, and the President identified the need for more reforms, more investment and new markets, while noting that competition for markets has become increasingly intense.

That makes the forum’s message broader than an invitation to invest. It is a pitch for Azerbaijan to be seen differently.

As mentioned before, the country is no longer presenting only its oil and gas fields. It is presenting transport corridors, renewable energy, industrial zones, agriculture, reconstruction, digital infrastructure and a growing pool of human capital.

Naturally, the transition will not happen overnight, and energy will remain important for the next decades. But perhaps the most significant point in President Ilham Aliyev’s speech was that Azerbaijan’s next economic chapter is being framed around using the wealth, infrastructure and experience accumulated through them to create something wider.

For investors, that may ultimately be the more consequential story: not Azerbaijan after oil, but Azerbaijan building an economy in which oil is no longer the whole story.