AZERBAIJAN’S ECONOMIC STRUCTURE AND ITS ROLE IN GLOBAL VALUE CHAINS

Azerbaijans economic structure is characterized by a strong dependence on the oil and gas sector, which has historically played a central role in shaping the countrys economic development. Over the past two decades, energy exports have driven GDP growth, state revenues, and foreign direct investment. However, this reliance has also made the economy vulnerable to fluctuations in global oil prices, highlighting the need for diversification. In recent years, Azerbaijan has taken steps to modernize and diversify its economy by investing in non oil sectors such as agriculture, tourism, information technology, and transport. The development of infrastructure, including major projects like the Baku Tbilisi Kars railway and the Alat Free Economic Zone, is aimed at positioning Azerbaijan as a key logistics and trade hub between Europe and Asia. Azerbaijans integration into global value chains GVCs remains limited but is gradually improving. The countrys strategic geographic location on the Middle Corridor Trans Caspian International Transport Route gives it potential to become a vital link in international trade networks. By enhancing connectivity, improving the business environment, and adopting international standards, Azerbaijan can increase its participation in GVCs beyond the energy sector. Efforts to attract foreign investment, improve customs procedures, and develop human capital are crucial to boosting Azerbaijans competitiveness in global markets. While challenges remain, including governance and institutional reforms, Azerbaijans evolving economic structure presents opportunities for deeper integration into global production and trade systems.