Azerbaijan's Energy Ministry calls for diversification to be viewed as tool, not goal

A qualitatively new model of economic development is emerging in Azerbaijan, based on accumulated human capital, financial resources, and international connections, Deputy Minister of Energy Elnur Soltanov said at the Technovation forum in Baku, Report informs.

"We are witnessing a changing economic cycle in Azerbaijan. A qualitatively new stage is beginning. The relatively easy results achieved in the previous period are already behind us. These results were made possible thanks to the efforts of the country's leadership. At the same time, I am interested in the fact that the human capital, financial resources, and international connections formed in the first stage are now creating the foundation for the next, qualitatively higher stage of economic development," he noted.

According to the deputy minister, the importance of economic diversification should not be overstated, as it is not an end in itself.

"Diversification is not an end in itself; it serves as a development tool. The main goal is sustainable and effective economic growth," Soltanov emphasized.

He added that economic growth should be the primary focus, while diversification is merely a means to achieving it.

"We're talking primarily about quantitative growth. Diversification certainly has a positive impact, as it makes the economy more resilient. However, if we look at classical economic theory, particularly David Ricardo's theory of comparative advantage, diversification is not seen as a key goal. On the contrary, it emphasizes that countries should focus on areas where they can produce more efficiently and with lower opportunity costs," the deputy minister said.

In his opinion, an excessive emphasis on diversification could, in some cases, lead to subsidizing inefficient and unprofitable enterprises.

"I understand that there are social aspects here, as well as political issues that need to be addressed. However, the main issue should be directly linked to economic growth-sustainable and long-term. And the issue of diversification should be approached within this framework," Soltanov added.