Transformation in 4IR mode: Azerbaijan is focusing on digitalization Caliber.Az review

With the start of the formation of a post-industrial economic model in the world, more and more attention is being paid to the digital transformation of industry, the introduction of modern IT technologies in business processes, trade, financial and agricultural sectors.

The listed trends are also noticeable in Azerbaijan, where, in particular, incubation centers and startups are being created, work is underway to create powerful DATA centers and the G-cloud system, an IT Academy is operating, and other components of the innovation ecosystem are being promoted.

During the International Cyber Security Days (ICSD 2023) conference held in Baku the day before, talk was raised about the completion of the development of the Azerbaijani Digital Economy Strategy and the projects and undertakings envisaged within the framework of this document.

Over recent years, the global economy has been at the stage of transition from industrial and raw material clusters to information clusters, which form the basis of high-tech innovative development. Increasing the share of software solutions in the manufacturing sector, shifting the process of designing and replicating IT products to the computer and network space, decentralization of administration mechanisms through remote services and liberalization of all economic processes helps to increase competition and reduce costs, including through wide international labor division.

Being information transparent, the new digital ecosystem focuses on design and engineering, which allows you to create a more successful and competitive product. In general, due to the growing number of breakthrough innovations, that is, products and services that meet the demands of the information age, a fundamentally new ideology of the economy of the future is being formed, and post-industrial realities require new approaches to work, tools and production culture.

The listed processes are most noticeable in Japan, Korea, China, the USA, the EU, and a number of other advanced countries of the world, where the multi-level infrastructure of the Fourth Industrial Revolution (4IR) is already being actively formed.

In general, the concept of innovative production is based on the process of transforming scientific research into a market product or service, through many collective efforts - vendors of chip manufacturers, software and research IT companies, universities, venture funds, etc. The commercialization of knowledge and research most successfully occurs in a favorable environment that supports an innovation ecosystem (IEC), which formalizes all these efforts, allowing for a synergistic effect to be achieved.

The process of digitalization of the Azerbaijani economy is one of the most complex and sought-after tasks that the government of the republic will have to implement in the coming years. Based on the basic network infrastructure in our country, it is necessary to accelerate the development of the digital economy, expand innovative production and the service sector, create the prerequisites for accelerating the development of human capital, including in the software business, startups, etc.

The listed tasks are formulated within the framework of the strategic program adopted two years ago - “National priorities for socio-economic development: Azerbaijan 2030” and the “Strategy for socio-economic development of Azerbaijan for 2022-2026” implemented within the framework of this document.

At the same time, in order to specify the activities planned for the coming years and detail plans in the field of digitalization of the domestic economy, a special document is being developed in Azerbaijan.

“It is expected that the Digital Economy Strategy of Azerbaijan will be approved before the end of this year after studying feedback and proposals from the public and private sectors,” said Fariz Jafarov, executive director of the Center for Analysis and Coordination of the IV Industrial Revolution under the Ministry of Economy, during the ICSD 2023 conference held on the eve of the conference.

According to him, as part of the development of the Digital Economy Strategy, directions for digitalization in relevant profiles will be agreed upon with the relevant ministries and departments of the republic, including such areas as tourism, transport, logistics, agriculture, food security, etc. The document also provides for public-private partnership mechanisms: for example, within the framework of cooperation with the private sector, the implementation of about 34 projects is envisaged, and about 14 in the public sector.

“In the shortest possible time, the country developed and submitted to the Cabinet of Ministers a Digital Economy Strategy, the priority areas of which are ensuring information security and cybersecurity, as well as creating a sustainable technological infrastructure to ensure the transition to a digital economy,” said Deputy Minister of Economy Sahib Mammadov. “Among other things, the strategy includes such areas as Big data, artificial intelligence, Internet of things (IoT), digital marketing.”

As the deputy minister noted, the project documentation has already been transferred to members of the working group, which includes representatives of 17 different government agencies and departments, including the Ministry of Economy.

It should be noted here that the most important goal of the digital transformation of the domestic economy is to increase its competitiveness with a focus on innovative trends and more complete inclusion in the system of the international division of labor.

This work has been underway for several years, and the initiatives planned within the framework of the new strategy are based on the solid base of modern IT infrastructure that has been formed in recent years and efforts to digitalize a number of sectors of the domestic economy. In particular, over recent years, work in this direction has been carried out with the support of companies and specialists from Turkey, Israel, a number of European countries, and China.

Thus, recently, the Azerbaijani Communications Department has been establishing close cooperation with the Defense Industry Committee and the Office of Digital Transformation of the Presidential Administration of Turkey, with the support of which a number of programs are being developed aimed at developing human capital, including in the field of cybersecurity, as well as participation in the development of “government clouds" G-cloud.

When implementing the G-cloud project, which is nearing completion, the best practices of the USA, Britain, Turkey, Norway, Ireland and Estonia were used, cloud services were created, and the transfer of information systems of 36 government agencies to the cloud began.

A key component of the G-cloud project is the creation of modern, high-performance and high-capacity DATA centers in Azerbaijan. It will improve the efficiency of such important initiatives for the digitalization of the economy and public administration in Azerbaijan, such as Big Data, etc.

In turn, thanks to the initiative of the World Economic Forum (WEF), the Center for the Fourth Industrial Revolution (4IR) was opened in Baku a year and a half ago. The activities of the Azerbaijani WEF Center, the first in the CIS countries, are intended to make an important contribution to accelerating the introduction of modern technologies, digitalization and the application of innovations in our country, and this work is being promoted through three main platforms. These platforms include the development of artificial intelligence and machine learning, IoT systems and urban transformation, as well as digital commerce.

And since the end of last year, negotiations have been ongoing with the United Nations Industrial Development Organization (UNIDO), which has shown its readiness to support Azerbaijan in implementing initiatives and projects in the field of 4IR and digitalization of the national economy.

In particular, UNIDO experts developed four thematic modules on innovation management, business coaching, 4IR management skills and digital transformation for the Digital Education and Training Center (DEIC), created by UNIDO in collaboration with the Azerbaijani Innovation and Digital Development Agency.

The most important step in digitalizing the country’s economy is the training of specialized specialists in the IT field - programmers, system integrators, network administrators, personnel in the field of cybersecurity, etc. An example is the computer academy Step IT Academy, an Azerbaijani-Israeli training center for teaching information technology at the Azerbaijan State University of Oil and Industry, where training is carried out by Israeli specialists in relevant programs.