Assessing State Support for MSMEs in Azerbaijan: Evidence from Concessional Lending (2020-2024)

Abstract

This study assesses state support for MSMEs in Azerbaijan by examining concessional lending and its relationship with selected macroeconomic indicators during 2020–2024. The analysis is limited to five observations because pre-2020 MSME indicators were compiled under a different methodology, while 2024 is the latest year with comparable official data. Using descriptive analysis, indexed trends, and Pearson correlations of logarithmically transformed variables, the study identifies strong positive co-movement between concessional lending and MSME value added (r = 0.9278). Concessional lending more than doubled and MSME value added rose by 93%, whereas fixed-capital investment peaked in 2022 and fell below its 2020 level by 2024. The MSME share of GDP declined to 12.8% in 2022 before recovering to 16.8% in 2024. Sectoral structure remained stable in 2023–2024. Given the limited observations, the correlations are interpreted descriptively rather than causally, highlighting the importance of investment dynamics and sectoral structure in assessing state support.