East Zangazur and Karabakh economic districts – new geographical driver of economic development in Azerbaijan (ANALYTICS)

Since regaining its territorial integrity after the 44-day Patriotic War, Azerbaijan has been working extensively to rebuild the East Zangazur and Karabakh economic districts.

Azerbaijan is actively working to determine the economic potential of the territories liberated from occupation and develop their economy.

For this purpose, on November 16, 2022, by the Decree of the President of Azerbaijan, Ilham Aliyev, the "'I State Program on the Great Return to the liberated territories of Azerbaijan" was approved.

One of the main target indicators of the program is the formation of an entrepreneurial environment with the attraction of new investments for the reconstruction of the economy in the liberated areas. One of the main goals of the State program is to increase the favorable environment for entrepreneurship and support the development of business activities.

Azerbaijan allocated 2.2 billion manats for the restoration and reconstruction of Karabakh and Eastern Zangazur region in 2021, and 2.7 billion manats in 2022. In the 2023 budget, 13 percent more than the previous year, i.e. 3 billion manats, was allocated for the restoration of territories liberated from occupation.

Taking into account that the territory of Karabakh made up 15-20 percent of the country's economy in the period before the occupation, and the share of those territories in ensuring the country's food security was about 15-17 percent, it can be noted that if those territories are revitalized and quickly integrated into the national economy, the general welfare of the country will increase.

Baku-based economist Vugar Bayramov believes that the economic potential of regions liberated from occupation, especially Lachin and Kalbajar, including their share in the country's gross domestic product, shows that the economy in those areas can grow many times over. The economic potential of the lands freed from occupation is multi-spectral, covering various fields of agriculture, industry, and tourism.

Areas such as mining, metallurgy, food industry, processing industry, tourism-recreation, creative industry, pharmaceutical, grain growing, vegetable growing, viticulture, cotton growing, fruit growing, animal husbandry, poultry, beekeeping, building materials have development potential in the areas freed from occupation.

Investments in these areas will be important both from the point of view of increasing non-oil exports and import substitution, as well as from the point of view of connecting to value chains. Post-conflict reconstruction will play an important role in the economic security of the country, including food security. Various investment promotion mechanisms can be applied in these areas, including industrial parks and neighborhoods, agro and technological parks, and other investment promotion mechanisms.

Karabakh has resources, strategic assets, efficiency, and markets that can attract investors' interests.

The government has already taken a number of important steps to promote entrepreneurship in Karabakh and East Zangazur. According to the Small and Medium Business Development Agency, by January 1 this year, the agency received 1,339 applications to engage in business activities in the liberated territories.

A significant part of the applications, i.e. 873 are local and 466 are foreign applications covering 37 countries. Entrepreneurs from Türkiye, Russia, Kazakhstan, and Hungary are particularly interested in investing in Karabakh and Eastern Zangazur.

In order to revive the economic and social life in the liberated areas, Azerbaijan has started implementing a number of stimulating measures in the field of tax benefits and social insurance. According to these concessions, the residents of the liberated territory are exempted from profit, property, land, and simplified tax for 10 years from January 1, 2023.

Generally, East Zangazur and Karabakh economic districts will be a new geographical driver of economic development in Azerbaijan - a growth center. Investment and construction work in this region will accelerate the growth of GDP in Azerbaijan.

Analytic group of News.Az

The article focuses on the theme "promotion of socio-economic development of regions"

The article was published with the support of the Media Development Agency of the Republic of Azerbaijan (MEDIA)

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