Accelerating economic diversification in Azerbaijan: can the 4th Industrial Revolution help?

UNDP Accelerator Labs
5 min readMay 29, 2019

Alessandro Fracassetti

Azerbaijan, a resource rich economy, experienced an explosion in growth in the beginning of the millennium as a result of rising commodity prices. This growth translated into development as poverty fell and median incomes rose, making it one of the most prosperous economies in the former Soviet Bloc. When commodity prices plummeted in 2014, it also exposed the vulnerability of the economy by over-reliance on oil production. The vulnerability is driving a new found vigor for a reform-driven agenda and leadership for economic diversification and transformation.

Photo by: Orkhan Farmali

It is against this backdrop that UNDP is engaging with the government to identify the leverage points within existing policies and strategies to use the potential of the Fourth Industrial Revolution for growth and development, especially in identifying emergent trends, leveraging bottom up solutions and crowding in expertise and insights from the ecosystem.

Translated into practice — we started scoping out local innovators, identifying opportunities to bring new approaches and new workstreams into our own programming, and designing a portfolio of interventions. By applying the methods of the Accelerator Labs, we opened the pathway for a US$6 million commitment of the Ministry of Transport, Communication and High Technologies to work with UNDP on putting innovation at the forefront of economic and social development.

In a perfect storm of leadership, strategy, investment and ecosystem support, and a renewed offer from UNDP on strategic innovation — we at UNDP in Azerbaijan find ourselves in a position to start driving economic diversification.

In other words, we are connecting the dots between the problems we are trying to address and unusual outfits/local innovators and this is helping us rethink how and what we do in development.

Innovation is moving center stage

We are witnessing firsthand how much progress Azerbaijan has made in moving innovation to centre-stage of its policymaking. The results speak for themselves.

Take ASAN service, for example. ASAN (which translates as ‘easy’ in Azerbaijani) is the country’s one-stop shop solution for effective and transparent public service delivery, which received the prestigious UN Public Service Award in 2015. Going big on innovation, it is a state-of-the-art InnoLand Innovation and Incubation centre to support the private sector in development and expand the startup movement in the country through prototyping and design.

Event at the ASAN service center.

A new Innovation Agency is also being established in Azerbaijan under the Ministry of Transport, Communications & High Technologies. Once operational, the Agency will merge the State Fund for Development of Information Technologies and Azerbaijan’s first Hi-Tech Park, will assist local businesses as they design technological solutions and will support research, innovation and startups through grants, subsidised loans and investments, including venture financing.

Azerbaijan’s first Centre for Sustainable and Operational Social Security — DOST, which translates as ‘friend’ in Azerbaijani was inaugurated earlier this month. Similar to the concept of ASAN, DOST will serve as a one-stop shop solution to shorten time, improve efficiency and expand access to the country’s social services system, including social security, disability and unemployment benefits, pension funds, social insurance and other services, through substantially simplified and innovative procedures that benefit all, with the focus on inclusivity.

All of these progressive developments are, in fact, clear examples of the broader ecosystem where innovation and technology are more and more embraced by the country.

Wednesday is the new Friday in Baku

On a more grassroot level, a handful of enthusiasts, innovators and inventors are operating across a big spectrum of industries, from the energy sector to banking and telecom. Earlier this year, we hosted UNDP’s first informal coffee meetup with innovators, startuppers, blockchain experts and cryptocurrency gurus — among many other developers from all walks of life. The venue itself was a startup called United Coffee Beans — a local coffee shop and one of the first ever manufacturers of locally grown organic coffee produce in Azerbaijan. One fine Wednesday afternoon, framed as “Wednesday is new Friday”, this coffee gathering gave us a chance to meet so many incredible people who innovate every day, for a good cause. From an inventor of the new Braille Teach interactive handheld learning device for people with visual impairments to a brilliant writer, storyteller, public speaker and mentor who has authored in four crowdfunded books –KVAN, UBUNTU, ALAMO13 and ONQAKU –all of these individuals are the kind of unusual talent that we want to blend into broader development work through the Acceleration Lab to re-imagine development for the 21st century together.

New partners and an emerging portfolio

As we find new partners, our learning curve grows. Our collaboration with the Social Innovation Lab opened up opportunities for rethinking innovation for sustainable development and tackling everything from energy waste and biofuels to wellness, healthcare, infrastructure and e-governance. UNDP launched two flagship initiatives on innovation with SiL last year –the 2nd National Innovation Challenge on the Sustainable Development Goals and the first ever Cleantech Ideation Bootcamp dedicated to climate change action.

Photo by: Alex Knight

A new portfolio of interventions lands at the sub-national level, feeding experience into strategy and policy. The new “Robopark” — robot technology labs — will be launched in the Shamakhi and PirAllahi regions of Azerbaijan, building on successful UNDP pilot of the first robotics lab for children in one of the schools in Baku. Nationwide I2B (From Idea to Business) tours will be organised throughout the regions of Azerbaijan to encourage young enthusiasts to improve their entrepreneurial thinking and design new business solutions. The idea is to transform the innovation community into an innovation movement in the country. At the same time — we are working with local governments to design new smart city solutions that sit on the intersection of technologies, approaches and sectors — reframing the smart city debate to be more human-centered.

Leveraging the 4th industrial revolution for diversification will require both policy and infrastructure interventions. We will support the government to build the new Data Centre in Yevlakh which will offer a greater level of data protection while significantly improving the safety and accessibility of fast and reliable information for people, governments and companies not just within Azerbaijan, but also in neighbouring countries. Based on these experiences, UNDP will be leading the preparation of the vision for the National Strategy on High Technology (2020–2025) helping the country to unlock the development potential of digital technologies for the country and its people.

We feel the moment is right for UNDP’s global groundbreaking Accelerator Lab network in Azerbaijan. We look forward to a new generation of innovators joining our team to bring expertise, creativity and collective intelligence to help us re-imagine development together with our partners in the country.



UNDP Accelerator Labs

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