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This paper discusses the status of financial inclusion, education, and literacy in Azerbaijan as well as measures to foster the development of SMEs, which currently have inadequate access to financial resources. The primary policy challenge faced by the government of Azerbaijan is defining its role in creating broader access to financial products and services. This paper highlights the challenges faced in overcoming the barriers to financial inclusion, and solutions found, and discusses the main lessons learned and a potential way forward.The first section of the paper provides detailed information on the national financial system. The second section covers the status of financial inclusion for individuals and SMEs. The third section analyzes different (supply and demand) aspects of barriers to financial inclusion, while the remaining sections present policies aimed at promoting financial regulation, literacy, and education. Finally, the paper presents key policy recommendations.

Understanding long-term agricultural productivity is essential for designing agricultural policies, planning and targeting other economic policies (e.g., industrial policy), and managing agricultural business models. In a developing and oil-rich country such as Azerbaijan, agriculture is among the limited opportunities to diversify oil-based value added and address broad welfare issues, as farmers and agricultural workers account for a large share of total employment and the labor force. However, previous studies have not focused on an empirical assessment of the long-term and subsectoral productivity of crop commodities. Rather, they have used a highly aggregated and short-run perspective, focusing mainly on the impact of the oil sector on agricultural sectors. Here, we applied principal component analysis and hierarchical cluster analysis to identify similarities and differences in the productivity of specific crop commodities (e.g., cotton, tea, grains, tobacco, hay, fruits, and vegetables) between 1950 and 2021. We show that some crops are similar in terms of their variation, growth rates, and transition from the Soviet era to the post-Soviet period. Although the dynamics of change are different for food and non-food crops and for high- and low-productive commodities, it is still possible to narrow down specific subsectors that could reach the same productivity levels. This helps map out the productivity levels of crop commodities over time and across different subsectors, allowing for better policy decisions and resource allocation in the agricultural sector. In addition, we argue about some outlier commodities and their backward status despite extensive government support. Our results provide a common basis for policymakers and businesses to focus specifically on productivity and profitability from an economic standpoint.

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