Role of Special Economic Zones Policy in Increasing Azerbaijan’s Economic Development

Abstract

Special Economic Zones (SEZs) have become a significant feature of global economies, providing incentives for investment, and specifically examines the case of SEZs in Azerbaijan, focusing on government involvement in their development fostering mass production, boosting exports, and addressing unemployment. This article delves into the landscape of SEZs globally. Utilizing data collection and literature review methods, the research evaluates the performance and characteristics of Azerbaijani SEZs.The findings reveal that while Azerbaijani SEZs have shown growth, they have not fully realized their potential. Factors such as legislative reforms, government participation, and the nature of incentives offered have influenced their success. SEZs with foreign investment and strategic planning, such as the Sumgait Chemical-Industrial Park and Hajiqabul Industrial Estate, have fared better than others. However, some SEZs have struggled due to domestic market dynamics and short-term business strategies.  To enhance the role of SEZs in the economy, the article proposes several strategies for the Azerbaijani government. Firstly, a shift in the SEZ strategy from mere stimulus areas to revenue-generating enterprises is recommended to ensure a steady income stream for the government and foster competitiveness. Secondly, exploring joint ventures in SEZ development, either through public-private or public-public partnerships, could attract diverse investment sources and alleviate financial burdens on the government. Lastly, restructuring SEZ legislation to offer long-term incentives and cater to the needs of larger corporations is advised, making SEZs more attractive for sustained investment and contributing to sector-specific development goals.