The gradual reduction of fuel resources, their depletion, as well as volatility of fuel prices led to a growing interest of countries in the use of renewable energy sources. Despite the fact that energy production in Azerbaijan currently largely depends on development of hydrocarbon reserves in the country, nevertheless, development of renewable energy sources is certainly one of the strategic priorities of the government. The main objective of the research is to study the economic problems and institutional aspects of introduction of alternative energy in Azerbaijan and develop recommendations to stimulate production of renewable energy. With the help of methods of comparative analysis and dynamic comparisons, the state of development of alternative and renewable sources in Azerbaijan was analyzed. The results of the study show that in order to increase the production of renewable energy it is necessary to take a number of measures in this area: improve legislation, introduce state incentives for consumers of alternative energy, apply a green tariff to attract investment, ensure transparency and consistency of energy policy.

This study aims to substantiate the practicality of establishing a fixed exchange rate (FER) under external shocks to the Azerbaijani economy. Using regression analysis, principal component analysis, and the Granger causality test, we substantiated the inexpediency of a fixed FER for the manat (the national currency) due to: the ineffective fiscal and monetary policy of the state, weak integration into the U.S. economy, distrust of the manat in the population, and the weakness of currency hedging. Artificial retention of a FER will lead to devaluation and chronic economic recession (inflation growth, a decrease in real incomes of the population, a reduction of GDP per capita, and an increase in unemployment). It is substantiated that an increase in public confidence in the national currency should become the basis for the transition to a floating exchange rate (FER) for the manat as it will help to get the actual value of the manat.

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In modern conditions, the one-sidedness in the economy of Azerbaijan makes it necessary to accelerate the diversification process of the country’s economy. From this point of view, the development of the non-oil sector in the country presents the main priority of the government’s economic policy in Azerbaijan. The purpose of the study is to investigate ways of ensuring the diversification of the national industries in Azerbaijan, which aims to move to a new economic growth model in modern conditions. The study analyzes the economy’s current state and export diversification level in Azerbaijan using the Herfindahl-Hirshman index. As a result of the analysis, the level of diversification in Azerbaijan’s economy and exports was found to be very low (in 2021, the Herfindahl-Hirshman index was 0.23 for the economy and 0.79 for exports). The findings indicate that cooperation between the state and business plays a significant role in increasing the diversification of the economy following the goals of sustainable development of Azerbaijan. On the other hand, it helps stimulate entrepreneurship development in the non-oil sector. One of the ways to solve existing problems in this area is to create Eximbanks to increase the country’s export capabilities of non-oil products. The study offers recommendations to speed up the process of diversification of the economy in Azerbaijan and increase its efficiency.