Driven by swelling oil and gas profits, Azerbaijan has cemented its position as a leading economic powerhouse in the South Caucasus region while maintaining a low level of public foreign debt and significant export trade surplus.

Azerbaijan has come to dominate the South Caucasus economy, having leveraged its resource-rich lands to develop as a thriving trade hub in the region. Its significant trade surplus, low level of public foreign debt, and growing GDP have bolstered the country's influence within the region.

Sandwiched between regional economic giants Iran, Russia, and Turkey, Azerbaijan is blessed with resources that have kept its GDP far higher than its South Caucasus neighbors, Georgia and Armenia. In 2010, while Azerbaijan's nominal GDP was close to $55 billion, Georgia's was $11.6 billion, with Armenia at the rear of the pack with $9.4 billion.

Azerbaijan currently trades with more than 150 countries, and has increased its foreign trade turnover by 6.4% in the last eight years. A sign that its oil wealth is not being squandered, “during the same period, the average income has also increased 5.3% and more than 1 million jobs have been created," Shahin Mustafayev, Minister of Economic Development, told TBY. Emerging as the place to be in the region, from the $100 billion in investment Azerbaijan received between 2003 and 2011, “half of it was FDI," the Minister added. In 2010, Azerbaijan had a trade surplus of $14.76 billion, with $6.6 billion in imports and $21.36 billion in exports, of which $18.5 billion was crude petroleum.

Europe remains Azerbaijan's major export destination, with $12.6-billion worth of products—or 59.1% of its total—exported to the region in 2010. Asia is next with $6.3 billion, or 29.8%, and the US, with $2 billion or 9.5%. Within that mix, Italy is top of the pile, having received $7-billion worth of exports from Azerbaijan in 2010. The CIS region also received a sizeable chunk, at $1.98 billion, with Ukraine the largest benefactor at $888 million, followed by the Russian Federation on $773 million, and Turkmenistan with $200 million. Trade ties between Azerbaijan and neighboring Georgia have also strengthened of late, with exports to the country totaling $410 million in 2010, up from $395 million in 2009. Indeed, the State Oil Company of Azerbaijan Republic (SOCAR) has successfully developed infrastructure in the region, and 90% of Georgia's oil and gas imports now come from Azerbaijan, with Turkey next on the list for its regional expansion plans.

In terms of public foreign debt, the country is also leagues ahead of its regional neighbors. “Public foreign debt [in Azerbaijan] is a mere $4.5 billion, which amounts to around 8% of GDP," Azer Mursagulov, Advisor to the Executive Director at the IMF, told TBY. In contrast, Georgia's public foreign debt was 39% of GDP in 2010, the same as that of Armenia. The country's larger neighbors also run higher public foreign debt, with Turkey's 42% of GDP, and the Russian Federation's 11.75%, similar to Iran's at 11.6%, with the latter two sharing Azerbaijan's characteristic of being net energy exporters.

Azerbaijan's efforts at developing pipelines in order to carry its natural oil and gas resources are also continuing apace. The proposed Trans-Anatolian Pipeline (TANAP) would not only supply Azerbaijani gas to Turkey, but also form the basis of an extension that could further open up the European market to the country's gas reserves, boosted over recent years after several high-profile discoveries. Current pipelines also carry oil from the prime Azeri-Chirag-Guneshli (ACG) oil field through the Baku-Supsa pipeline to Georgia, the Baku-Novorossiysk pipeline to the Russian Federation, and the Baku-Tbilisi-Ceyhan pipeline through Georgia and onto Turkey's Mediterranean coast. The latter also runs parallel to a gas pipeline to the eastern Turkish city of Erzurum, which will be extended should TANAP become a reality. The country is also aiming for increased trade revenues as the Port of Baku and the capital's Heydar Aliyev Airport undergo extensive redevelopment and expansion as part of the Transport Corridor Europe-Caucasus-Asia (TRACECA) project. The project foresees the development of maritime, aviation, road, and rail infrastructure, including the creation of a new bridge to connect Georgia and Azerbaijan, alongside the historical Red Bridge, on the Tbilisi-Ganja road.

Hopes are high that improvements in regional infrastructure will also boost the country's non-oil and gas export mix. Currently, top non-prime exports include fresh fruit and sugar, while iron and steel exports are also significant, as is energy thanks to 10 new power-generation stations created over the last two years that have “[transformed] Azerbaijan from an energy importing country to a reliable energy exporter," the IMF's Azer Mursagulov told TBY.