Regional Development and Economic Co-operation Dynamics: The Case of Azerbaijan and the Caspian Countries

This study investigates the trade intensity relationships between Azerbaijan and the Caspian littoral countries—Iran, Kazakhstan, Turkmenistan, and Russia—during the period 2006–2024. The main purpose of the study is to present a descriptive analysis of the historical trends in the bilateral trade relations of countries in the Caspian region. The study employs the Trade Intensity Index (TII) as the primary methodological framework to measure the relative strength and direction of bilateral trade flows between Azerbaijan and its regional partners over time. The findings reveal that Azerbaijan’s trade intensity with the Caspian littoral countries is highly sensitive to global economic shocks and geopolitical developments. The Russia–Ukraine war and subsequent Western sanctions redirected Russia’s trade orientation toward neighboring regional partners, increasing Russia’s economic engagement with Azerbaijan and strengthening Azerbaijan’s strategic role in regional trade networks. By contrast, bilateral trade with Iran was constrained by international sanctions, while Turkmenistan’s highly centralized and closed economic system led to fluctuating trade dynamics largely driven by the energy sector. Although Kazakhstan possesses a relatively more open economic system, its trade intensity with Azerbaijan remained limited throughout the study period. By analyzing recent changes in trade intensity across the Caspian Basin as a whole, this study provides new empirical evidence of the role played by geopolitical tensions and external shocks in shaping regional trade relations. It highlights the asymmetric, fragile, and externally dependent nature of regional trade relations and offers policy-relevant insights regarding regional economic integration, trade diversification, and strategic co-operation among Caspian countries.