World Bank's Pryce: Policy Reforms Key To Accelerating Azerbaijan's Path To High-Income Status

On February 10, 2025, the World bank launched its 2024 World Development Report (WDR) in Baku, shedding light on the challenges and opportunities countries face in overcoming the "middle-income trap." During the event, Rolande Pryce, the World Bank's Country Director for the South Caucasus, offered key insights into Azerbaijan's economic outlook. She discussed the country's current position and the strategic approaches it can adopt to transition toward becoming a high-income economy.

In her interview with Azernews , Pryce provided further analysis on Azerbaijan's economic trajectory, outlining the path the country could take to achieve high-income status.

Pryce began by highlighting the significance of the Greater Heights report (Growing to High Income in Europe and Central Asia), which focuses on the economic trajectories of Central Asia, Eastern Europe, and the South Caucasus.

"We're very excited about this report," she noted. "It's a companion to the 2024 World Development Report that focuses on the middle-income trap, and it allows us to zoom in on the economies of Europe and Central Asia."

She emphasized that out of the 34 countries that have transitioned to high-income status 10 are from Europe and Central Asia.

"This is a great opportunity for Azerbaijan, as several of its regional peers have made this transition," Pryce explained. Currently, Azerbaijan is classified as a high-middle-income country and aspires to achieve high-income status.

Pryce pointed out that the Greater Heights report outlines potential policy actions that the government of Azerbaijan could consider in order to facilitate this transition. "The report identifies strategies and actions that could help the country move forward," she said.

She further emphasized the importance of aligning government policies with the right investments and institutional strengthening to support this transition. "Azerbaijan is in a good position, and with the right mix of policy reforms, it can accelerate its move to high-income status," she noted.

Pryce concluded by stressing that the report's findings offer valuable lessons for Azerbaijan to learn from its regional peers who have successfully navigated the path to high-income status. “The opportunities are there, and with continued focus and the right steps, Azerbaijan can achieve its goal,” she stated.

When asked about the "3I" strategy highlighted in the 2024 World Development Report, Rolande Pryce explained, "The 3-I strategy is a key component of the World Development Report. It stands for Investment, Infusion, and Innovation."

She elaborated on the three phases of the framework, starting with the first phase: Investment. "The first phase focuses on creating a strong foundation through investments in physical infrastructure, human capital, and a conducive business environment," Pryce explained. "This phase requires building strong institutions that will attract both domestic and foreign investments."

The second phase, Infusion, is about integrating global technologies and knowledge into the domestic economy. "It's about getting local actors to work at an international level and building the capacity to bring these technologies into the economy," she noted.

Finally, Pryce discussed the Innovation phase. "The third phase is when countries no longer simply mimic global technologies but begin to push the technological frontier themselves," she stated. "Azerbaijan's focus should be on developing its own products, services, and technological advancements, which would help improve productivity, efficiency, and global competitiveness."

Pryce emphasized that this framework is highly relevant to Azerbaijan's aspirations of moving from a high-middle-income status to a high-income status. "Azerbaijan's future growth will depend on its ability to advance through these phases," she concluded.

In conclusion, the World Bank's 2024 World Development Report provides a critical roadmap for Azerbaijan as it seeks to transition to high-income status. Rolande Pryce emphasized the importance of the "3I" strategy - Investment, Infusion, and Innovation - in this context. According to Pryce, Azerbaijan is at a pivotal stage where strategic policies, targeted investments, and structural reforms can drive significant progress toward achieving its high-income aspirations.

The first phase of the "3I" strategy, Investment, focuses on building strong foundations through infrastructure development, human capital, and fostering an environment that attracts both domestic and international investments. Moving to the second phase, Infusion, involves integrating global technologies and knowledge into the domestic economy, which will help elevate local businesses and industries to compete on a global scale. Finally, the Innovation phase is key for Azerbaijan to not only adopt but also push the technological frontier, fostering its own advancements and innovations.

With a careful balance of these strategies, Azerbaijan has the opportunity to overcome the middle-income trap and emerge as a competitive, globally integrated economy. The report suggests that with the right mix of policy actions, Azerbaijan can leverage its existing potential and continue on its path toward sustainable, high-quality growth in the years to come.

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