World Bank: Azerbaijan needs to shift to growth model based on '3I' concept

Azerbaijan should carry out structural reforms aimed at stimulating private sector growth and deepening economic diversification to reduce reliance on the oil and gas sector, World Bank Senior Economist for Azerbaijan Steve Loris Gui-Diby stated during "Fitch on Azerbaijan 2026" in Baku, Report informs.

He noted that in terms of economic structure and the significant role of the commodity factor, Kazakhstan is the most suitable country in the region for comparison with Azerbaijan. Nevertheless, at present, Kazakhstan still remains substantially dependent on natural resources, and high economic growth rates in that state are accompanied by an elevated level of inflation.

In Azerbaijan, on the other hand, more moderate rates of economic development are recorded alongside relatively low inflation, which remains within the target corridor of the Central Bank. The WB representative emphasized that the priority task for Azerbaijan at the current stage is implementing a package of reforms aimed at strengthening the private sector, improving competitive conditions, and increasing the inflow of foreign direct investment (FDI). First and foremost, this concerns measures to simplify investment procedures, ensure the protection of investors' rights, and eliminate market entry barriers.

In addition, the World Bank has launched the second phase of a study on corporate-level productivity issues in Azerbaijan, analyzing the flexibility of labor and capital reallocation among different sectors. Gui-Diby also pointed to the importance of the country transitioning to a growth model built on the "3I" concept (Investment, Infusion, Innovation), set out in the WB report on overcoming the middle-income trap.

According to his estimates, Azerbaijan has already successfully completed the phase of large infrastructure investments and must now concentrate efforts on the "infusion" phase - the transfer of knowledge, technology, and attracting quality FDI, which in the long term will allow the country to move to an innovative model and ensure sustainable long-term development.