Azerbaijan: mastering the art of attracting global investment Green energy, smart cities, big deals

With abundant energy resources and a strategic location at the crossroads of Europe and Asia, Azerbaijan has been a regional leader in attracting foreign direct investment (FDI) for more than 25 years. To sustain its investment appeal in the 21st century, the country is focusing on industrialisation through industrial clusters and special economic zones, expanding its green energy sector, and laying the foundations of a digital economy.

These achievements, alongside global trends in investment attractiveness, were highlighted at the inaugural Azerbaijan International Investment Forum (AIIF 2025), which opened on September 22 in Baku.

Held under the patronage of President Ilham Aliyev and organised by the Ministry of Economy and the Azerbaijan Export and Investment Promotion Agency (AZPROMO), with strategic partnership from The European House – Ambrosetti (TEHA) and informational and organisational support from Euronews and Sea Breeze, the inaugural AIIF 2025 was designed as an exclusive platform to explore investment opportunities in countries situated at the strategic crossroads of East and West, while shaping the future of global trade and sustainable supply chains.

The two-day event features two plenary sessions and around a dozen panel discussions addressing strategic regional integration, transit opportunities, innovation and green energy, infrastructure projects, as well as aspects of small and medium-sized enterprise development, public-private partnerships, and innovative transformations across various economic and financial sectors. The forum will also host thematic debates and an exhibition highlighting Azerbaijan’s investment opportunities and potential. The platform created within AIIF 2025 will provide participants with access to valuable insights on new paradigms of global competitiveness, while also enabling them to establish multilateral partnerships and conclude strategic agreements and memoranda.

“Today, economic growth in Azerbaijan has transformed into a long-lasting stable trend. During the period of 2021-2024, the non-oil sector rose annually by an average of 6.7%, while its share in the national economy has reached 68%. Non-oil exports in the last six months have almost doubled. This explicitly shows the increasing competitiveness of our country,” said President Ilham Aliyev in an address to AIIF 2025 participants, read out at the forum’s opening by Shahmar Movsumov, Head of the Department for Economic Affairs and Innovation Policy of the Presidential Administration of the Republic of Azerbaijan.

“For the time being, Azerbaijan already relies on economic diplomacy in its foreign policy to build new cooperative ties and further expand non-oil sectors, and the national tourism potential in particular.”

The president also noted that, compared with 2017, in 2025 the state budget revenues have increased 2.4 times, strategic foreign exchange reserves 1.9 times, while the ratio of public debt to GDP has fallen to 6.5%, making it one of the lowest in the world.

The president’s address also highlighted that Azerbaijan’s favourable geographic location positions the country as a strategic hub for regional economic policy. The development of modern production infrastructure further reinforces all these opportunities: special economic zones and advanced digital infrastructure provide ready-made platforms for the growth of manufacturing, logistics, renewable energy, digital services, and profitable agriculture.

The country’s modern infrastructure — including the Baku International Sea Trade Port, the Alat Free Economic Zone, and contemporary railway networks — offers investors direct access to global markets and highly efficient transit. The president also noted that transit cargo volumes along the Middle Corridor are increasing year by year, and are expected to rise even further in the coming years, particularly with the commissioning of the Zangezur Corridor.

“In addition to natural gas, solar and wind energy projects, the green energy zone in Karabakh and East Zangezur, including applied concepts of smart infrastructure, are turning our country into one of the leading participants in the global energy transition,” the President of Azerbaijan emphasised in his address.

Meanwhile, according to Vice Prime Minister Samir Sharifov, the country is currently implementing its 2022–2026 socio-economic development strategy, and preparations have already begun for the new four-year strategy for 2027–2030. A key focus of these strategies is ensuring economic growth, which is impossible without investment.

“Political stability and a predictable environment are essential conditions for any investment, and Azerbaijan possesses a strong financial base, macroeconomic stability, and a favourable business climate,” noted Sharifov, recalling recent assessments by international rating agencies. “The results of the World Bank’s Business Ready survey, as well as decisions by leading international credit rating agencies, indicate that Azerbaijan’s position has improved significantly in recent years. The international rating agencies Fitch and Moody’s have upgraded our country’s rating to investment grade.”

This comes as no surprise, given that over the past eight years the country’s macroeconomic and financial environment has strengthened markedly: the manat exchange rate has remained stable, the fiscal situation has improved, foreign exchange reserves have reached 95% of GDP, and are fifteen times higher than the country’s external public debt.

All of the above undoubtedly provides an important foundation for the development of Azerbaijan’s non-oil sectors. “Thanks to this, Azerbaijan objectively serves as a centre not only geographically but also in logistics and energy across the South Caucasus and Central Asia,” said Minister of Economy Mikail Jabbarov during the forum, emphasising that Baku’s natural advantages as the only capital on the Caspian Sea coast are being leveraged to attract foreign direct investment.

Indeed, Azerbaijan has achieved considerable success in attracting investments that have supported the country’s sustained development: between 2004 and 2024, $344.4 billion in investments flowed into the domestic economy, a significant portion of which — $213.2 billion — was directed to the development of the non-oil sector.

In this regard, the AIIF 2025 platform proved highly productive in promoting the investment component: according to the Ministry of Economy, the total value of documents and projects agreed upon on the first day of the forum exceeded $5.5 billion. Notably, the State Agency for Water Resources of Azerbaijan and the Saudi company ACWA Power signed an “Agreement on the Design, Construction, Operation, and Maintenance of a Caspian Sea Water Desalination Plant.”

ACWA Power is actively investing in renewable energy sources (RES) in Azerbaijan and is set to commission the 240 MW Khizi-Absheron wind power plant by the end of this year. The Saudi company, together with the Ministry of Energy, SOCAR, and Masdar, is implementing projects on the Caspian Sea shelf and developing renewable energy generation projects aimed at export in the Nakhchivan Autonomous Republic (NAR).

During the forum, another significant project in urban transport energy efficiency was signed: the Ministry of Economy concluded an agreement with Improtex Group and MAN Truck & Bus to develop eco-friendly transportation in the country and expand the fleet of electric buses. Additionally, a cooperation agreement was signed with UAE-based Modon Holding on the development of the “City within a City” concept.

The Agency for the Development of Economic Zones (ADEZ) under the Ministry of Economy and the Chinese company China Datang Overseas Investment Co. signed a memorandum of understanding to establish a “Green Energy” industrial park in Azerbaijan, aimed at promoting the renewable energy and environmental technology sector. Chinese partners have also shown interest in constructing a waste recycling and energy production plant in the country, and joint projects in aviation, electrical equipment, transformer manufacturing, and related sectors were discussed.

During the forum, representatives of the Saudi company Aramco Ventures discussed cooperation with Azerbaijan in the renewable energy sector, including opportunities for investment in energy storage technologies, direct carbon capture, and carbon footprint reduction. Meanwhile, Uzbekistan expressed interest in joint projects with Azerbaijan in advanced petroleum refining, as well as in chemistry, the oil and gas industry, mechanical engineering, and the production and sale of construction materials, textiles, and more.

AZPROMO and the World Economic Forum (WEF) signed a partnership agreement within the framework of the Association Centre, aimed at expanding ties in international trade and investment. Additionally, the Ministry of Economy and the International Finance Corporation (IFC) signed an agreement on cooperation, knowledge sharing, and experience exchange in enhancing public-private partnership capacity.