Page 45 - Azerbaijan State University of Economics

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

During the Russia-Ukraine war and the economic sanctions imposed on Russia by
Western countries, European demand for Azerbaijan’s natural gas has surged.
Following the discovery of the Shah Deniz gas-condensate field in 1999, plans were
made to transport natural gas from this project to Turkey via the Baku-Tbilisi-Erzurum
pipeline. The second phase of the Shah Deniz development expands this effort,
channeling gas to Turkey and Southern European countries through the upgraded
South Caucasus Gas Pipeline, the Trans-Anatolian Natural Gas Pipeline (TANAP),
and the Trans-Adriatic Pipeline (TAP). In the near future, natural gas exports to
Europe are projected to reach 27 billion cubic meters.
Azerbaijan’s economic growth significantly contributes to its transformation into an
eco-friendly nation and a hub for 'green energy.' The country possesses considerable
potential for developing alternative and renewable energy sources. The government
has established ambitious targets, including raising the share of installed renewable
energy capacity to 30% by 2030 and designating Karabakh and Eastern Zangezur as
'green energy' zones (Republic Newspaper, https://respublika-news.az, November 29,
2024). Practical steps are already being taken to export green energy, a sector viewed
as highly promising. Notably, construction has commenced on underwater cables
beneath the Black Sea to facilitate the export of green energy to European countries.
Azerbaijan has invested approximately $20 billion in the Turkish economy. While its
economy heavily relies on oil, this dependence renders it vulnerable to fluctuations in
global oil prices. For example, in 2015, when crude oil prices plummeted on the world
market—dropping from roughly $150 per barrel to $15–$20—Azerbaijan’s economy
faced significant repercussions. The national currency, the manat, lost half its value
due to devaluations in February and November of that year. Oil revenues sharply
declined, leading to reductions in both nominal and real GDP. In oil-dependent nations
like Azerbaijan, economic growth and contraction are closely tied to volatility in
global oil prices.
Economic growth can also be achieved through the intensive utilization of existing
economic potential and the expansion of the geographic scope of economic activity—
specifically, by broadening foreign economic relations and diversifying the economy.
The expansion of the geographic scope of economic activity occurs through the
development of bilateral intergovernmental relations, such as cooperation with
European countries, or through participation in various integration frameworks. These
include the Turkic Council, joint energy projects involving Azerbaijan, Kazakhstan,
and Uzbekistan, as well as organizations like the Islamic Development Bank, the
Organization of Islamic Cooperation, and the Economic Cooperation Organization.
Azerbaijan functions as both a capital-importing and capital-exporting nation. State
entities and private entrepreneurs from Azerbaijan have invested in businesses across
countries including Russia, Georgia, Belarus, and various European nations. Notably,

45