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Azerbaijan to create Karabakh development model - Center for Analysis of Economic Reforms

26 January 2021 11:54 (UTC+04:00)
905

By Trend

The Azerbaijani Center for Analysis of Economic Reforms and Communications continues research on the development of the Karabakh region, director of the center Vusal Gasimli told Trend.

Gasimli stressed that the reintegration of Karabakh will increase the capital of the Azerbaijani economy.

"Along with the 2.2 billion manat ($1.3 billion) allocated from the state budget for 2021, the national wealth involved in circulation - land, forest, water, cultural resources, minerals, and property - increase the amount of capital,” he said.

“Given the stability of the labor force in Azerbaijan, the increase in capital, fixed assets, accelerates capital-intensive economic growth. New fixed assets will increase the return on assets, that is, the volume of production per manat of capital, since they are based on modern technologies,” noted the director. “On the other hand, according to the Solow model, investments in Karabakh will create more value by starting from zero and a longer interval to the equilibrium point - just as after World War II, Germany and Japan built competitive economies in ruins. In Karabakh, public investment will play a catalytic role, while private investment will become a driving force.”

“It’s logical that Standard & Poor's (S&P) recently confirmed Azerbaijan's long-term sovereign credit rating in local and foreign currencies at 'BB+/B', upgrading its outlook from 'negative' to 'stable'. The S&P substantiated this with reduced security risks of the country’s financial sector and the balance of payments as a result of the liberation of Karabakh (as a result of 44-day war from late Sept.27 through early Nov.2020) and the signing of a ceasefire agreement (ending the war on Nov.10)," Gasimli also noted.

According to him, there are two more factors that will have a positive impact on economic growth.

"The efficiency of the economy itself and human capital. Head of the state Ilham Aliyev announced a new, more effective model of governance of Karabakh, instructed to create the institution of a special representation of the President of Azerbaijan, and the Karabakh Revival Fund was created laying the bases for the Karabakh model of development, which, if successful, will be applied in other regions of Azerbaijan,” he added.

“In Karabakh there is being implemented a smart region approach is, which includes modern urban planning, thus meeting the challenges of the 4th industrial revolution, foreign capital and, most importantly, a new model of governance. Karabakh, which became a burden for Armenia, is the driver of development and a source of inspiration for Azerbaijan," summed up Gasimli.

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