AZERBAIJAN'S ECONOMY: INSTITUTIONAL MODERNIZATION AND DIRECTIONS FOR THE IMPLEMENTATION OF THE INVESTMENT ENVIRONMENT

Abstract

In recent years, broad institutional reforms have been implemented to promote the development of the non-oil sector and attract foreign investment in Azerbaijan’s economy. This article analyzes the effects of institutional modernization on the investment environment. The study used macroeconomic data and international index indicators for 2015–2024, and economic-statistical and econometric analyses were carried out in the SPSS program. The results show that business environment indicators in Azerbaijan, including the Doing Business ranking and the economic freedom index, have improved noticeably. Positive dynamics are observed in institutional indicators such as the effectiveness of public administration, but corruption-related indicators remain weak. At the same time, the structure of investment allocations has changed, and the share of the non-oil sector has increased significantly. According to the results of the econometric analyses, institutional reforms have had a statistically significant impact on the improvement of the business environment, but a further increase in institutional quality is required in order to achieve sustained growth in foreign investment inflows. The new results obtained in the article reinforce conclusions about the role of institutional modernization in improving the investment environment in Azerbaijan and have practical significance in determining the direction of subsequent reforms in this field.