Page 43 - Azerbaijan State University of Economics

Umudvar Q.Aliyev, Gunay U.Guliyeva: Explorıng Economıc Expansıon In Azerbaıjan’s Natıonal Economy

geographical space constituted a primary constraint on economic growth—given that
the integration of resources into the economic cycle and their efficient utilization are
key drivers of growth—Azerbaijan nonetheless achieved economic progress during
this period. This resilience persisted despite the occupation of 20% of its territory and
the exclusion of 160,000 hectares of land from agricultural use due to climate change.
Despite these challenges, Azerbaijan swiftly attracted foreign investment to
alternative resources, most notably the oil sector, which serves as the cornerstone of
the national economy. This strategic shift not only expanded the scope of economic
activity but also facilitated the diversification of foreign economic relations. On
September 24, 1994, the 'Contract of the Century' oil agreements secured an
unprecedented $8 billion in foreign investment for the Azerbaijani economy. Despite the
occupation of 20% of Azerbaijan’s territory, which constrained its geographical scope,
these contracts catalyzed economic growth. Over time, macroeconomic stability was
established, and the initiation of oil production and transportation—enabled by
partnerships with foreign companies—resulted in substantial growth rates. By 2014,
Azerbaijan’s GDP reached a peak of $72 billion. The national currency maintained
stability against foreign exchange rates, bolstered by elevated global crude oil prices,
which also swelled the reserves of the State Oil Fund of Azerbaijan (established in 1999).
Real incomes of the population rose, while annual oil production surged from 10–12
million tons in the early years of independence to 50 million tons.
GDP in mln dollars
90000
78807.5
80000 75234.7 74294.118
69683.9
70000

60000 54622.2
52909.3 52996.8
48852.5 48174.2
50000
42693
44297 37862.8
40000
33050.3
30000
20983
20000
13238.7
7276
10000 5272.8
2443.3 1629.3 3180.8
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Graph 1. GDP of Azerbaijan (1990-2024)
Source. State Statistical Committee

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