“The full cycle of production should be concentrated in one place, and through the implementation of this project towards the development of the steel industry, metallurgical complex and aluminium industry we must ensure the development of a complete production chain – from production and processing to promotion of small and medium entrepreneurship – so that Azerbaijan produces end products.”
President of the Azerbaijan Republic
Successful implementation of the industrialization policy in Azerbaijan is kept in the focus of attention. Industrialization is a rapid socio-economic transition to a new stage by increasing the industrial sector’s share in the national economy. By promoting investment and economic development, the process of industrialization modifies the society’s world outlook. This fact is obvious upon the example of England where the world’s first industrial revolution took place.
A cluster is one of the various economic mechanisms that are widely applied to ensure sustainable and comprehensive development of industrial sectors. A cluster is an effective system comprising entrepreneurship units operating within the same or similar industrial fields and based on interrelated performance principles within a complex system. Normally, a cluster is formed where interrelated or complementary processes are defined as parts of a single cycle: with an infrastructure network established; with cross-use of technological resources, common marketing principles, labour power and labor reserves enabled; and with trade relations tailored to meet the interests of all parties involved.
According to the Director of the Scientific Research Institute of Economic Reforms, Vilayat Veliyev, “the pioneering industrial clusters in Azerbaijan will be established around the SOCAR Polymer Petrochemical Complex in the Sumgayit Chemical Industrial Park, as well as at the solid waste decontamination site in Balakhani. The establishment of these clusters will enable small and medium businesses to unite around SOCAR Polymer and the Balakhani solid waste decontamination site to create a production line based on the feedstock produced at these enterprises.”
An industry cluster represents the entire value chain of a broadly defined industry from suppliers to end products, including supporting services and specialized infrastructure. Cluster industries are geographically concentrated and inter-connected by the flow of goods and services. By clustering together, firms are able to benefit from such things as the neighbourhood's pool of expertise and skilled workers; its easy access to suppliers; and its information channels (both formal like magazines and informal like rumours).