ABSTRACT
Economic expansion, a broader concept than economic growth, integrates geographical scope, global connectivity, and qualitative development, yet remains underexplored compared to GDP-centric analyses. This study investigates economic expansion in Azerbaijan, a small state with a population of 10.25 million and land area of 86,600 km², focusing on two dimensions: the restoration of territorial sovereignty following the 2020 liberation of regions occupied by Armenia (1991–2020) and the broadening of economic activity through international partnerships. Drawing on a mixed-method approach—combining a literature review of classical and contemporary theories (e.g., Schumpeter, 1939; Romer, 1990; Stern, 2006) with a case study of Azerbaijan using data from 1990–2024 (e.g., State Statistical Committee, World Bank)—we analyze how Azerbaijan leverages its strategic position and resources to expand its national economy. Findings reveal that oil-driven initiatives, such as the "Contract of the Century" (1994), catalyzed initial expansion, with GDP peaking at $72 billion in 2014, while post-liberation reconstruction ($10 billion invested) and green energy goals (30% renewable capacity by 2030) signal diversification. Contrasting Azerbaijan with larger states like the U.S., we highlight its unique reliance on sovereignty, regional cooperation, and investments (e.g., $20 billion in Turkey) rather than geopolitical dominance. Challenges, including oil dependency and food import reliance ($2 billion annually), persist, but liberated territories offer new potential. This study underscores Azerbaijan’s model of expansion, blending resource wealth with structural transformation, and offers insights for small-state economies navigating global integration and sustainability.

Keywords: national economy, economic expansion, geographical location of economic activity, economic place, factors of economic expansion
JEL Classification: O47. R11, R53

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