Azerbaijan is a transitional economy with vast oil and gas reserves and considerable agricultural potential. The country's annual GDP has grown by an annual average of approximately 20% in the years preceding the global financial crisis, providing a potentially very attractive market for foreign investors despite problems in trying to curb inflation. It is widely recognised that corruption is deeply institutionalised throughout Azerbaijani society and poses an obstacle to both social and economic development in the country.

Positive developments in relation to corruption and investment:

• Azerbaijan was named the first participating country to be fully compliant with the Extractive Industries Transparency Initiative (EITI) principles and criteria in 2009.
• Recent years have seen rising salaries for civil servants in Azerbaijan and training being undertaken to raise awareness in the bureaucracy about corruption.
• According to international observers, the Azerbaijani government has made significant progress in the area of anti-money laundering through its newly established Financial Monitoring Service, which monitors suspicious transactions across the banking and finance sector.

Risks of corruption:

• Azerbaijan is a challenging market for doing business, not least due to the systemic level of corruption which has deterred many potential investors from entering the market.
• Popular opinions identify the State Customs Committee and the Ministry of Taxes as the institutions of greatest concern, in terms of corrupt practices, to companies operating in Azerbaijan, according to the US Department of State 2011.
• The country has few institutional checks on graft and the rapid growth in the energy sector has offered considerable opportunities for the institutionalisation of corruption.