Promoting free enterprise and liberal economic reforms in Azerbaijan

Over the past two decades, Azerbaijan has implemented a broad range of economic reforms aimed at strengthening free enterprise, supporting private sector growth, and building a more liberal, market-oriented economic system. Following independence and the transition from a centrally planned model, the country gradually introduced policies designed to reduce administrative barriers, attract investment, stimulate entrepreneurship, and diversify the economy beyond oil and gas revenues.

Today, the promotion of free enterprise in Azerbaijan is reflected not only in government strategies and legislation but also in measurable economic indicators such as GDP growth, expansion of the taxpayer base, rising numbers of small and medium-sized enterprises (SMEs), increased digitalization of public services, and stronger integration into global economic systems. The country’s liberal economic trajectory has been supported through structural reforms, tax modernization, digital transformation, financial support mechanisms for entrepreneurs, and international cooperation initiatives, News.Az reports.

One of the clearest indicators of the success of liberal economic reforms in Azerbaijan is overall economic growth and diversification. In recent years, Azerbaijan’s GDP has continued to expand, reaching more than 126 billion manats in 2024 and continuing to grow in 2025. Notably, the non-oil and gas sector recorded 6.2% growth, reflecting diversification beyond the traditional energy sector. Expansion in the non-oil sector has been driven by agriculture, manufacturing, services, logistics, tourism, and information technology. This shift is essential for building a sustainable liberal economic model in which private sector activity becomes the main driver of growth rather than state-led energy revenues.

As of January 1, 2025, the number of registered taxpayers in Azerbaijan totaled 1,597,229, comprising 87% individuals and 13% legal entities. This represents a 5.4% increase from the previous year, with the number of legal entities rising by 7.3%.

In 2024, 14,441 new commercial organizations were registered in Azerbaijan, with 89.3% locally invested and 10.7% foreign-invested. Of these, 83.4% completed registration electronically, indicating a shift toward digital processes.

The European Union's EU4Business initiative supported 7,038 SMEs in Azerbaijan in 2024, leading to the creation of approximately 10,167 new jobs and an 18.7% increase in overall turnover. This support underscores the emphasis placed on SME development as a cornerstone of economic growth.

In 2024, the Small and Medium Business Development Agency (KOBIA) awarded the Dayaq award to 15 business entities that demonstrated innovation, export orientation, and significant contributions to employment. This initiative highlights the government’s commitment to recognizing and promoting entrepreneurial success.

Significant investments have also been directed toward infrastructure development, with 21,226.1 million manats invested in fixed assets in 2025. These investments aim to enhance the business environment and support economic activity across various sectors.

Azerbaijan’s efforts to promote free enterprise and liberal economic reforms have produced tangible results, including increased GDP, a broader taxpayer base, growth in business registrations, and expanded support for SMEs. These developments reflect the country’s ongoing commitment to creating a favourable environment for entrepreneurship and sustainable economic growth.

Over the past decade, Azerbaijan has continued implementing reforms to strengthen a liberal economic environment and support free enterprise. These efforts have led to improvements in business registration, tax administration, entrepreneurship support, and economic diversification. This article presents key developments and data illustrating the country's commitment to liberal economic reforms.

In 2025, Azerbaijan’s Gross Domestic Product (GDP) reached 129.1 billion manats, marking a 1.4% increase compared to the previous year. The non-oil and gas sector grew by 2.7%, further reflecting diversification beyond the traditional energy sector.

As of December 1, 2025, the number of registered taxpayers totaled 1,667,152, comprising 86.8% individuals and 13.2% legal entities and other organizations. This represents a 4.8% increase year on year, indicating continued expansion of the formal economy.

In the first nine months of 2024, 10,194 commercial organizations were registered in Azerbaijan, 89.3% locally invested and 10.7% foreign-invested. This represents an 8% increase compared to the same period in 2023, highlighting the country’s improving business climate.

In 2024, the European Union's EU4Business initiative supported 7,038 SMEs in Azerbaijan through 33 projects with a total budget exceeding €114.8 million. These projects generated approximately 10,167 new jobs and increased overall SME turnover by 18.7%, reinforcing the central role of SMEs in economic growth.

In 2025, the Small and Medium Business Development Agency (KOBIA) awarded the Dayaq award to 17 business entities that demonstrated innovation, export orientation, and strong employment contributions, further illustrating state support for entrepreneurship.

In 2025, investments totaling 21.2 billion manats were directed toward fixed assets. Although this represents a 5.6% decrease compared to 2024, the continued investment underscores the government’s focus on improving the business environment and supporting economic activity across sectors.

Socially, the promotion of free enterprise has contributed to job creation, middle-class expansion, and increased income opportunities. Private sector employment continues to grow, while regional development programs have helped generate new jobs outside major cities. Liberal economic reforms also support higher living standards by increasing competition, improving product quality, and expanding service availability.

Overall, Azerbaijan’s promotion of free enterprise and liberal economic principles reflects a long-term strategic vision centred on diversification, private sector empowerment, and global integration. While the state continues to play an important role in strategic sectors and infrastructure development, economic policy increasingly emphasizes entrepreneurship, innovation, and competitive markets. The combination of regulatory reforms, financial support, digital transformation, and international cooperation demonstrates a comprehensive approach to building a modern liberal economic system.

As Azerbaijan continues implementing structural reforms and expanding its non-oil economy, free enterprise is expected to remain one of the central drivers of sustainable growth and long-term national development.

The material was prepared with the financial support of the Media Development Agency of the Republic of Azerbaijan.

News.Az