Azerbaijan: innovative trends backed by human capital Review by Caliber.Az

One of the five basic points of the "National Priorities for Socio-Economic Development: Azerbaijan 2030" is the development of human capital and the promotion of modern innovations. This trend is a key condition for boosting the digitalisation of the country in accordance with the objectives of the Fourth Industrial Revolution. Over recent years Azerbaijan has achieved tangible progress in human capital development, said Fadia Saadah, WB Human Development Director for Europe and Central Asia Region, speaking recently in Baku at an event dedicated to the presentation of the "Human Capital Review for Azerbaijan".

The key directions of the National Priorities and the Strategy for Socio-Economic Development of Azerbaijan for 2022-2026 being implemented within this document provide for qualitative transformation of the socio-economic basis of the country in order to develop components of industry 4.0 and increase the share of knowledge-intensive, innovative products in the non-oil sector of the country. In particular, one of the main goals of the digital transformation of the domestic economy is to increase its competitiveness, focus on innovative trends, and integrate more fully into the international division of labour.

Building on the country's basic network infrastructure, we need to accelerate the development of the digital economy, expand innovative production, and more actively introduce IT technologies in trade and services, finance, transport, utilities, municipal services and the medical sector. To this end, work has already begun on forming an ecological niche for IT start-ups and creating specialised incubation centres to develop software business training for start-ups, training specialists to implement IoT (Internet of Things) technologies, and implementing robotisation projects, developing other know-how, for example in the segment of "green" energy, energy efficiency systems and waste-free, environmentally friendly production. Of course, the development of all these areas would not have been possible without the formation of human capital development mechanisms in the country: positive changes are underway in higher education institutions and specialized scientific centres to improve personnel qualifications and train specialists in IT and electronic technologies, mathematics, physics, and other exact sciences.

Türkiye, Israel, a number of European countries, and the relevant structures of the World Economic Forum (WEF), which recently initiated the establishment of a branch of the Centre for the Fourth Industrial Revolution in Baku, are providing Azerbaijan with significant support in addressing these issues. Recently, the Azerbaijan Communications Authority has been establishing close cooperation with the Defence Industry Committee and the Digital Transformation Office of the Turkish Presidential Administration, with whose support a number of programmes aimed at developing human capital are being developed, including in the field of cyber security, as well as in the development of the G-cloud 'government cloud'. A similar collaboration is underway with Israel's Technion University to establish the Azerbaijani Cyber Security Centre, which will train specialists in this field.

According to Economy Minister Mikayil Jabbarov, innovation readiness and human capital development are key to achieving sustainable progress in the country: "We must combine our efforts to align economic development and the area of innovative products with education, practical and applied science, and with other areas, and in line with this build capital to advance education.

According to assessments by authoritative international organisations, Azerbaijan has made noticeable progress in human capital development and education in recent years. Thus, the Global Innovation Index (GII) published by the World Intellectual Property Organisation (WIPO), which covers the economies of 132 countries in 2022 on the basis of 81 indicators, showed a fairly high performance on a number of sub-indices. In particular, our country ranked 9th on the indicator "pupil-teacher ratio", 42nd on "graduates in science and technology", 43rd on "researchers", 57th on "women employed with academic degrees" and 23rd on "university-industry cooperation in research and development". In the "innovation resources" sub-index, Azerbaijan is ranked 79th, ahead of Armenia (82), Kyrgyzstan (85), Belarus (86), and Tajikistan (104) within the CIS. In the "Human capital and science" section Azerbaijan improved its position by the integral indicator "research and development", having moved from 104th in 2021 to 76th in 2022.

International donor agencies also give a fairly good assessment of the country's efforts in the area of human capital development. In particular, this is confirmed by the World Bank's research, which has prepared a review that assesses aspects of human capital development and challenges in this area, identifies priorities, and formulates specific tasks and solutions to support the government in implementing the National Priorities 2030 and the Medium-Term Strategy 2026.

"Thanks to the reforms undertaken by the Azerbaijani government in recent years, there has been tangible progress in human capital development: according to our report from 2010 to 2020, the percentage of human capital in the country has increased from 50 to 58 per cent," said Fadia Saadah, WB regional director, during the presentation of the "Human Capital Review for Azerbaijan" on February 24. Stressing the importance of the partnership between the WB and the government of the republic within the joint human capital improvement programme, the regional director noted that the preparation of the survey and other steps in this area contribute to improving the quality of the resource base. "WB updates human capital indices for countries every two years and forecasting of human capital depends on improving three aspects - education, health, and social protection. The main purpose of my visit to Azerbaijan is to share innovative ideas of the WB for development of the mentioned areas as well as improvement of the index," she said. As Saadah noted, the world is changing rapidly, and new initiatives relating to the climate are appearing against the background of digital technology, and all of this in itself creates some opportunities for additional economic growth in Azerbaijan. At the end of last year, the WB analysts published forecasts, according to which in case of implementation of certain reforms, namely increasing productivity and development of human capital, the average annual non-energy GDP growth in Azerbaijan in 2024-2050 could reach 1.7 per cent. In this case, GDP per capita could reach $10,250 in 2050.

Prospects of economic growth supported by high technologies, as well as achievements in the implementation of the joint project with the WB "Employment Support in Azerbaijan" were discussed during the meeting of the Minister of Labour and Social Protection of Azerbaijan Sahil Babayev with a World Bank delegation. "Ensuring sustainable development of human capital is one of the main priorities of social and economic reforms implemented in Azerbaijan," Minister Babayev said, emphasizing the role of the WB as a reliable partner of our country in the field of innovation.

It is noteworthy that initiatives to raise the level of human capital affect not only the IT sector and innovative production, but also the social sector, including the area of medicine. "Improving the healthcare system, especially its digitalisation and human capital development is a priority objective for our country. And so cooperation with the World Bank in various areas is of particular importance in terms of the application of international best practices and innovation," health minister Teymur Musayev said during talks held with the regional director of the WB Fadia Saadah.

In this regard, it is appropriate to recall that the digitalisation of domestic medicine and improving the capacity of medical personnel in this area are designated as the most important vectors in the country programme of the Asian Development Bank (ADB).