Azerbaijan's Post-Oil Economy and the Middle-Income Trap: A Comparative Analysis

Gubad Ibadoghlu

EconStor Research Reports from ZBW - Leibniz Information Centre for Economics

Abstract: This article examines Azerbaijan’s post-oil economic trajectory and assesses the country’s growing exposure to the middle-income trap. Drawing on retrospective macroeconomic data, medium- and long-term forecasts, and comparative evidence from Armenia, Georgia, and Kazakhstan, the study argues that Azerbaijan’s hydrocarbon-dependent growth model has become increasingly unsustainable. While oil and gas revenues supported rapid growth during the boom years, declining oil production, weak diversification, low productivity growth, and reduced foreign investment have contributed to a sharp slowdown since 2016. The analysis shows that Azerbaijan is projected to underperform its regional peers in GDP growth, GDP per capita, innovation capacity, governance quality, economic freedom, and human development. Institutional constraints, monopolization, systemic corruption, and limited political and civil liberties further weaken the country’s capacity for structural transformation. The article concludes that, absent comprehensive market-oriented reforms, stronger institutions, anti-corruption measures, and productivity-enhancing diversification, Azerbaijan is likely to remain trapped in the upper-middle-income category for an extended period, while Armenia, Georgia, and Kazakhstan are better positioned to converge toward high-income status.

Keywords: Azerbaijan; Kazakhstan; Armenia; Georgia; post-oil economy; middle-income trap; economic diversification; hydrocarbon dependence; institutional quality; governance; corruption; economic growth; freedoms (search for similar items in EconPapers)
Date: 2026
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/340201/1/Azerbaija_Post_Oil_Economy.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:esrepo:340201

DOI: 10.2139/ssrn.6661518

Access Statistics for this paper

More papers in EconStor Research Reports from ZBW - Leibniz Information Centre for Economics Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().