Baku outlines goals for innovative economy Review by Caliber.Az

Digital transformation which involves the introduction of modern IT technologies in business processes, trade, the financial sector, and industry is getting more attention as the post-industrial model of economy emerges in the world. This trend is also observed in Azerbaijan, where incubation centers and startups are being created and other components of the innovation ecosystem are being formed. The Innovation Summit II took place in Baku on December 14, held under the slogan "Baku is calling", during which the representatives of relevant government agencies, IT professionals, startups, and Hi-Tech companies discussed the successes of the country in innovation development and outlined the goals for the future.

Today the global economy is at the stage of transition from industrial and raw material clusters to information clusters that form the basis of high-tech innovation development. The increasing share of software solutions in the production sector, the shifting of the process of design and replication of IT products into the computer-network space, decentralization of administration mechanisms due to remote services, and liberalization of all economic processes increase competition and reduce costs, including through a broad international division of labor. Being informationally transparent, the new digital ecosystem focuses on design and engineering, which allows the creation of a more successful and competitive product. In general, due to the growing number of breakthrough innovations, i.e. products and services that meet the demands of the information age, a fundamentally new ideology of future economy is being formed, and post-industrial realities require new approaches to work, tools, and production culture.

These processes are most noticeable in Japan, Korea, China, the US, the EU, and a number of other advanced countries, where a multi-level infrastructure of the industrial revolution 4.0 is already being formed. In general, the concept of innovative products is based on the process of transformation of scientific research into a market product or service through multiple collective efforts: vendors - chip manufacturers, software and IT research companies, universities, venture capital funds, etc. Commercialization of knowledge and research is most successful in a favorable supporting environment - the innovation ecosystem (IES), which formalizes all these efforts, allowing the achievement of a synergetic effect.

The formation of an innovation ecosystem, including IT laboratories at universities and research centers, diversified start-ups and incubation centers, and software and Hi-Tech companies, has been given a lot of attention in Azerbaijan in recent years. In order to accelerate the processes of digital transformation of the country a number of measures to improve governance in the field of electronic resources, innovation, high technology, and communications was adopted by the decrees of the head of state dated April 27 and October 11 last year. In particular, the Agency for Innovation and Digital Development was established within the structure of the Ministry of Digital Development and Transport, whose responsibilities include the organization, coordination, and implementation of activities in the field of digital transformation in Azerbaijan, as well as support for scientific, technical, innovation activities and relevant experience in the field of high technology, assistance to individuals and legal entities to acquire modern technologies and solutions, encouragement of innovative projects, etc.

"Development of innovation vector for Azerbaijan is the most important task and one of the five strategic priorities of the country development," Economy Minister Mikayil Jabbarov said on December 14, speaking at the II Annual Innovation Summit, organized by PASHA Holding with the support of the Agency for Innovation and Digital Development. - Provision of stable and steady development of the country implies realization of complex measures, including wide use of innovations both in state structures and private sector".

The head of the economic department pointed out three priority directions for further development of innovations in the country: first - is the development of human capital, for which it is necessary to coordinate vectors of economic development with the sphere of education, practical and applied science, with other areas and in accordance with this to form capital to promote the field of knowledge: second - development of the new culture of production and investment in risky projects - with tolerance to mistakes and support not always commercially successful pilot projects. The third direction is the formation of an innovation ecosystem that combines the efforts of the public and private sectors with the possibility of broad implementation of best international practices.

To accelerate the process of forming such an ecosystem in our country it is essential to strengthen cooperation between all relevant structures, thinks the Minister of Economy, including concentrating on such conferences as the Annual Innovation Summit. Held in Baku for the second time, the forum has become a universal platform, bringing together leading experts and companies in the field of high technology, as well as innovation-oriented startups, creating an opportunity for professional discussions, exchange of ideas, and experiences and thereby supporting the efforts to create an innovation ecosystem in the region. The summit included presentations, panel discussions, speeches, and workshops with representatives of the country's largest IT companies and startups, internationally renowned speakers, etc.

"Uniting the efforts of the business community, civil society, as well as the public sector is very important for turning Azerbaijan into an innovation center in the region," said another summit participant, Rashad Nabiyev, Minister of Digital Development and Transport of Azerbaijan, who emphasized that the state, along with the private sector, plays a major role in achieving innovative progress. The minister also noted two important conditions for the digitalization of the country's economy. "In order to achieve progress in innovation, first of all, Azerbaijan needs access to broadband internet: we provided over 500,000 subscribers with high-speed internet, and it is five times more than five years ago. At the same time, we have to achieve the most important goal - to provide the entire territory of the country with high-speed Internet by the end of 2024," Nabiyev said.

At the same time for the development of the innovation sphere, it is important to develop a startup ecosystem and increase the volume of software solutions, know-how, various inventions, and IT products, which is crucial for the selection of the most successful projects, especially since at the moment the number of commercially effective ventures is kept within 2 per cent.

In order to optimize this work, Azerbaijan has started the process of integrating local software businesses, and startups into a global system of division of labor - with the implementation of best global practices, including the formation of elements of Industry 4.0. In this regard, our country actively cooperates with the European Bank for Reconstruction and Development (EBRD) and the World Bank (WB); our own support project is also realized by BP-Azerbaijan, which launched several modules of education, training, and consulting for students and supports local start-up businesses. In the development of the national startup ecosystem, increasing its commercialization level, Türkiye and Israel are the most active, with the support of which projects to develop venture capital financing, support specialized technology parks, and incubation centers in universities are implemented. In particular, we are talking about joint projects to create "smart" villages and cities, develop the renewable energy segment, and introduce energy-saving technologies and IoT (Internet of Things) components in public utilities, industry, agriculture, and chatbots in e-commerce, banking, and insurance sectors.