This book undertakes modernization and diversification - two issues of vital relevance to the sustainable economic development of Azerbaijan. This research also analyzes the functionality of the existing linkages between innovation and economic growth through identifying and quantifying major constraints and challenges in Azerbaijan. Azerbaijan’s economic modernization and diversification away from dependence on oil and gas is a prority of the government of Azerbaijan. Why doesn't a resource-based approach give a sustainable competitive advantage to economies? The sustainable competitive advantage results from the inimitability, rarity, and non-tradability of intangible resources. So "karaoke capitalism" encourages business to generate originals rather than cover versions. Economic Darwinism proves the importance of innovation-backed development as the single way for survival. Resource-rich countries like Azerbaijan should trade off between autarkic (self-sufficient) and export-oriented models. Favoring the first way leads us to a curse rather than a blessing. In order to avoid the curse of resources,a country such as Azerbaijan should tend to export-oriented development.