Environmental challenges and the impact of human capital on Azerbaijan’s foreign economic activity

The aim of this study was to analyse the main environmental challenges of Azerbaijan, their impact on the economy and international trade, and to assess the role of the quality of human capital in the country’s adaptation to these challenges and the development of innovative solutions to reduce the negative impact on the environment. The study used an analytical approach that included the analysis of atmospheric emissions, such as CO2, methane and nitrogen oxides, the assessment of their economic impact, as well as the analysis of the Human Development Index (HDI) indicators, which covered the level of education, health and standard of living of the population. The study analysed Azerbaijan’s environmental challenges, including air pollution, land degradation, water scarcity, and climate change, highlighting their significant economic impacts, such as losses of 0.11-0.14% of gross domestic product (GDP) from air pollution, 10-11 billion manats annually from land degradation, and reduced productivity in key sectors. The results of the study showed that Azerbaijan’s HDI changed from 0.762 in 2019 to 0.722 in 2020 due to the impact of the COVID-19 pandemic, and by 2022 it had increased to 0.760, almost returning to the 2019 level, indicating the effectiveness of measures to restore the economy and improve the quality of life. The study also found significant disparities in vocational education levels, with enrolment at only 12.4% of the total number of students in 2020, limiting the country’s innovation potential. Azerbaijan’s participation in international environmental initiatives, such as cooperation with the Green Climate Fund, which promotes the introduction of modern technologies in renewable energy, including the development of solar and wind power plants, was assessed. The results demonstrate that developing human capital, strengthening environmental culture, and implementing environmentally friendly technologies can contribute to sustainable economic growth, reducing environmental burdens, and increasing the country’s international competitiveness