Opportunities to increase the capacity of Azerbaijan's logistics infrastructure and existing problems in the Silk Road project Research Document
Members of the study group consisting of graduates of the "Young Economists” trainings provided by the Institute for Democratic Initiatives (IDI) prepared a study paper by comparing other alternative routes with the East-West route where the country is located and using reports published by international organizations on logistics infrastructure and annual reports on the activities of official bodies.
The purpose of this study is to study the level of readiness of Azerbaijan's logistics infrastructure in the Silk Road project, to compare its competitiveness with other alternative routes based on price and time factors (time spent on the transportation of goods from the first destination to the final destination), and to identify recommended steps to offer competitive services.
Researches of influential international financial institutions such as the World Bank, Asian Development Bank, European Bank for Reconstruction and Development were widely used in the study.
The first section of the study provides information and research on the opportunities created for Azerbaijan by the Silk Road project, as well as various calculations.
Other sections of the study provide information on the current state of the use of transit potential by Azerbaijan, the existing problems in this area, the factors that lead to a decline in Azerbaijan's logistics performance based on statistical data and interviews with representatives of logistics companies.
The main results of the study in this direction are as follows:
The East-West Corridor, on which Azerbaijan is located, faces stiff competition although it is shorter than other alternative corridors.
There are also technical factors that affect the competitive advantage of both routes.
The East-West Corridor provides transportation at a higher cost than the New Eurasia route.
The one-day savings in trade between the countries along the Silk Road corridor means an average increase of 5.2 percent in exports.
Although Kazakhstan, Georgia, and Turkey, which are located on the East-West corridor, have trade and customs agreements with the European Union and China, Azerbaijan does not have existing agreements with mentioned organizations and countries.
Although the Strategic Roadmap for the Development of Logistics and Trade, adopted in 2016, aims to rapidly increase the potential of Azerbaijan as a transit country, the results for the current period are unsatisfactory.
The potential of the new seaport has not yet been fully used.
Although Azerbaijan's position on the foreign trade indicator in the World Bank's Doing Business report has significantly improved in recent years, it is still far behind the corresponding indicators of developed countries.
As a result of the study, recommendations were given to strengthen the logistics potential of Azerbaijan in the Silk Road project.