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The COVID-19 pandemic, negatively affecting the achievement of most of the Sustainable Development Goals, is leading to a significant crisis, especially in less developed economies, and poses serious challenges to governments around the world. Negative annual GDP growth per capita in Azerbaijan in 2020 amounted to -4.95% (below the world average of 0.56%), necessitating the resumption of short-term economic growth and achieving long-term competitiveness, sustainable development, and inclusive economy. Azerbaijan's positions in these areas, namely 58th place out of 141 countries in the global competitiveness ranking (63rd place for innovation potential and 73rd place for ICT implementation), 55th place out of 165 countries in the Sustainable Development Index, 80th place out of 131 countries according to the Global Innovation Index testify to the important role of innovation management in Azerbaijan. The article's main purpose is to study the relationship between innovation development, competitiveness, and sustainable development of the country. To empirically confirm the hypotheses, a sample of 9 countries (Azerbaijan, Georgia, Armenia, Germany, France, Finland, Estonia, Poland, Czech Republic) was formed. Several indicators were analysed based on data from the statistical department of the United Nations Department of Economic and Social Affairs, the World Bank, the World Economic Forum, and the World Intellectual Property Organization from 2010 to 2020. Statistical analysis of indicators of sustainable development, competitiveness, and innovative development of the studied countries. With the help of correlation-regression analysis and the Granger test (using the STATA software package), the mutual directions of influence of indicators of innovative development, the competitiveness of the country, and sustainable development in Azerbaijan and other sample countries were established. A regression model with random effects was built. The impact of the parameters of innovative development on the annual GDP growth per capita as a key component of the country's competitiveness and its sustainable development was formalized and assessed. The obtained results could be useful in developing measures to increase competitiveness and achieve sustainable development goals in Azerbaijan and further research. [ABSTRACT FROM AUTHOR]