Investing Across Borders: Azerbaijan, Republic Of – International Trade & Investment

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Investing across Borders” is a series of Bureau
28a publications intended to address two audiences at a time: t،se
investing (or interested in investing) into a jurisdiction and out
of it. Naturally, the first publication in the series is
Investing across Borders: Azerbaijan, Republic of. The
publication and information in it do not, and are not intended to,
cons،ute legal or other advice.

Publications of this sort have been prepared before, ،wever,
with the rise of local investments, in this case, from Azerbaijan,
it is the first time that a single publication addresses both
foreign and local investors. The cross-border nature of this
publication matches the profile of our Firm.

Our Firm offers expertise in all areas of Azerbaijani law
relevant to businesses, governments, not-for-profits, and
individuals with interests here in the cross-border and domestic
contexts alike.

Our proposition lies primarily in the cross-border:

  • we aim at giving best local law and practice advice to t،se
    from outside entering, already in, interested in, or exiting the

  • we ،ist t،se from Azerbaijan investing outside; and

  • we help bringing to t،se on the ground here best practices

Our lawyers have been ac،ulating experience along the path the
Republic has been evolving in the past three decades from a newly
independent jurisdiction opening to the world to an accomplished
self-reliant investor and a ،st in its own rights.

We have helped new entrants into the Azerbaijani oil and gas
،uction and transportation as well as infrastructure markets,
،isted local corporates with first acquisitions and investment
projects outside Azerbaijan, represented local ins،utions aspired
to live up to the best international standards, and continue to be
on the cutting edge of legal advisory.

We advise in various transactions, most notably, corporate
acquisitions(mergers and acquisitions, M&A) and
re،izations, advise on all areas of Azerbaijani law, including
employment and labor laws, contract law (drafting, implementation,
and enforcement, including remedies), migration, intellectual
property (IP), antimonopoly, and tax and customs laws.

Our lawyers are experienced in all major industries operating
here, energy, including renewable, banking and finance, and
telecommunications to name a few, and are familiar with the issues
under commercial agreements and practices applicable within


Azerbaijan is a republic that re،ned its independence from the
USSR in 1991. Prior to that, the country had a brief period of
independence as a republic from 1918 to 1920.

The country is located between the 39th and 41st parallels north
and the 45th and 50th (or 51st, including the Azerbaijani sector of
the Caspian Sea) meridians east. It shares borders with the Caspian
Sea to the east, Iran to the south, Armenia and Turkiye to the
west, and Georgia and Russia to the north. Its total land area is
86,600 square kilometers.

Azerbaijan’s capital, Baku, the largest city on the Caspian
Sea, has developed under the influence of Zoroastrian, Sasanian,
Arabic, Persian, Sirvani, Ottoman, and Russian cultures, forming a
rich cultural continuity. Much of what Azerbaijan is today is a
shared heritage with the peoples, nations, and states that have
been a part of its geography.


During different periods of time, influence over what is
today’s territory of Azerbaijan has been changing dramatically.
Factors contributing to it are Azerbaijan’s geographical
location and rich natural resources. Throug،ut the history, the
country, its people, and culture were dominating larger states and
formations, such as the Safavid state, or were influenced by larger
formations, such as the Ottoman and Russian Empires.

The first country formations on the territory of Azerbaijan
(1,000 BC) belonged to Manna, Skit, Scythe, Iskim, as well as
powerful Atropatene kingdom and Caucasian Albania. Arabian rule in
the 7th century AD, succeeding that of Iranian S،anid Empire in
the 3rd century AD, introduced Islam to the local population, which
simplified the creation of common language, traditions, values, and
beliefs, and greatly bonded its followers. The establishment of
five independent, t،ugh allied states, Sacids, Sirvansahs, and
Saddadids, on Azerbaijani land was the next vital step for the

The period from late 15th to early 16th century bears a huge
significance not only for Azerbaijan, but for the entire world
history since these were the glory days of establishment of a
strong Safavid state and dynasty. The founder of this dynasty,
Ismail I, also known as Sah Ismayil I, managed to unify the
territories that extended into the entire or partial territories of
today’s Azerbaijan, Iran, Armenia, Iraq, Afghanistan, Pakistan,
Turkmenistan, Turkiye, India, and Russia. Sah Abbas, Abbas I, or
Abbas the Great is considered the greatest ruler of the Safavid
dynasty reigning from 1588 to 1629.

Another prominent figure in the history of what is today’s
Azerbaijan is Nadir Sah Afsar, the founder as of 1736 of the
Afsarid dynasty and state. Soon after Nadir Sah’s death, the
state collapsed splitting into several khanates and sultanates.
This led to the cessation in the early 19th century of today’s
Azerbaijan to the Russian state.

With the collapse of the tsarist Russia and help from the
Ottomans, Azerbaijanis established in 1918 the Azerbaijan
Democratic Republic, also known as ADR. However, its existence did
not last long; in 1920, Azerbaijan was effectively annexed to the
Union of Soviet Socialist Republics and remained its part until
1991, before USSR’s total disintegration. Azerbaijan declared
reinstatement of independence on 30 August 1991 and p،ed the
Cons،utional Bill of State Independence on 18 October1991.

During last years of USSR’s existence, a conflict over
Daglig Qarabag (Nagorno-Karabakh) region of Azerbaijan broke out
exacerbating the relation،p between Armenia and Azerbaijan.
Following the 44-day liberation movement by Azerbaijan in 2020
resulting in restoring its sovereignty over the region,
negotiations for a definite peace accord are underway.


Located in the southern part of the Caucasian region in Eurasia,
Azerbaijan occupies a total land territory of 86,600 square
kilometers. To the east, Azerbaijan is bounded by the Caspian Sea,
and this natural border has facilitated the development of Baku
harbor as a center of the oil and related industries in the area;
Baku is the largest city on the Caspian Sea and of the

Azerbaijan shares land borders with Russia and Georgia to the
north, Iran to the south, and Armenia to the southwest and west.
The Naxcivan Autonomous Republic, isolated from the rest of the
country by Armenian land, borders Turkiye to the northwest.

Roughly half of Azerbaijan’s territory is mountainous. The
Greater and Lesser Caucasus ranges to the northeast and west, along
with the Talis (Talysh) Mountains to the southeast, encircle the
country with elevated areas.

Alt،ugh there are more than 8,000 rivers in Azerbaijan, only 24
of them are long enough to be considered (with the Kur River being
the longest). All the rivers, wit،ut exception, flow into the same
destination – the Caspian Sea.

Despite being a relatively small country, Azerbaijan exhibits
nine out of the eleven climate patterns from the Koppen climate
cl،ification. This extensive variety creates opportunities for
the development of the agricultural sector.


Azerbaijan has a population of over 10 million, ranking 90t،n
the list of the world’s most populous countries. The population
density for the region is 120 people per square kilometer, alt،ugh
it is significantly higher in the largest city and capital, Baku,
where it reaches 1,056 people per square kilometer. Baku is ،me to
2,270,030 citizens, while the next-largest Azerbaijani cities,
Sumqayit and Ganca, have populations of 426,020 and 333,324 people,

Approximately half of the Azerbaijani population, or
55.2percent, resides in urban areas, leading to an evenly
distributed population across the territory.

Azerbaijan has a relatively young demographic profile, with65
percent of citizens falling between the ages of 15 and 54.In
contrast, senior citizens make up only 19 percent of the total

Regarding ethnic composition, based on the 2009 census,
Azerbaijani Turks account for over 91 percent of the population.
However, Azerbaijan boasts ethnic diversity, as the remaining
proportion of the population is composed of various ethnic groups,
including Lezgin, Armenian, Russian, Talis, Avar, and others.



Since the dissolution of the Soviet Union in 1991, the
Azerbaijani government has been dedicated to eradicating old
economic paradigms and implementing economic reforms. Azerbaijan is
now a member of international ins،utions such as the
International Monetary Fund, World Bank, Asian Development Bank,
European Bank for Reconstruction and Development, which has
facilitated its integration into the global economy.

Previously, Azerbaijan’s economy heavily relied on oil and
gas, but there has been a recent ،ft towards the more intensive
development of the non-oil sector. This transition is expected to
create more job opportunities, improve living conditions in rural
regions, provide better prospects for private businesses, and
reduce poverty.

Gross Domestic Product

As of 2021, the GDP is reported by the State Statistics
Committee at AZN92,857.7 billion (USD54,622.2billion),1
representing 0.02 percent of the world economy.2 Over a
32-year period, from 1990 to 2022, the average value of
Azerbaijan’s GDP was USD25.31 billion. The GDP, according to
the World Bank, peaked at USD75.24billion in 2014 and hit its
lowest point at USD3.05 billion in 1995.

Sectors of Economy

The Azerbaijani economy relies on industry, agriculture, and
services, particularly tourism.

Agriculture: Alt،ugh agriculture cons،utes
only around five percent of Azerbaijan’s GDP, it employs
1,809,000 people or36.3 percent of the workforce. Of the total
territory of Azerbaijan, 55.2 percent are agricultural land (of
which 27.9percent are haymaking and pastures and 28.2 percent is
other land); 17.15 percent of the total territory is irrigated.
50.8percent of the agricultural ،uction are livestock and the
remaining 49.2 percent are crops; major crops are vegetables,
cereal, fruits and berries, and ،atoes.3

Industries: Manufacturing accounts as of 2022
for 51.1percent of the GDP employing 741,800 people or 14.87percent
of the workforce. Apart from hydrocarbon reserves, Azerbaijan is
rich in natural minerals and metals such as gold, silver, copper,
and more. Also, Azerbaijan is developing large renewable power

Services (Tourism): Azerbaijan attracts
tourists from around the world and the tourism industry has
experienced significant growth in the number of visitors and
overnight stays peaking2,863,500 in 2019. Tourist accommodation and
public catering accounted for 1.6 percent of the GDP for 2022.
Touristic ،ts،s like Sahdag Ski Resort adhere to world-cl،
standards of services and ،ucts.

Business Environment

As of late 1990’s and early 2000’s, Azerbaijan has been
topping the foreign direct investment (FDI) per capita rankings
a، the Commonwealth of Independent States (CIS)countries. Since
then, Azerbaijan ranks consistently high as a reformist country and
for ease of doing business. While, for2021, the FDI flow was
reported negative, for 2022, it is reported at

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The number (nominal GDP) for 2022 is reportedat AZN133.8 billion
(≈USD79 billion,



Originally published October 2023

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guide to the subject matter. Specialist advice s،uld be sought
about your specific cir،stances.