Middle Corridor should turn into economic ecosystem - EU

BAKU, Azerbaijan, October 21. The Middle Corridor should be transformed into an economic ecosystem, reads the “Trade Study Report – Trade Sector Development in Azerbaijan: Policies, Constraints and Opportunities”, issued by the EU.

The report says that against the backdrop of changes in global supply chains and geopolitical tensions in recent years, the importance of the Middle Corridor has increased significantly, while the volume of cargo transportation along the corridor has risen considerably.

“Azerbaijan has implemented a number of important measures to expand the access of the Middle Corridor to the country’s transport and logistics capabilities. To maximize the benefits of the Middle Corridor, forward-looking policies are needed to transform it from a “route through which cargo passes through the country” into an “economic ecosystem where cargo, capital, technology, and production generate value within the country.” This transformation would turn the corridor from serving merely a transit function into a large-scale economic corridor.

This is because revenues derived solely from transit mainly consist of revenues from railway, port, road, and logistics services. The economic corridor model, by contrast, generates greater added value through additional activities, such as manufacturing, packaging and sorting, re-export, warehousing and distribution, financial and insurance services, R&D and technology services, and repair and maintenance services,” reads the report.

The report’s authors note that Azerbaijan’s Alat Free Economic Zone (Alat FEZ), industrial parks, industrial districts, agroparks, logistics infrastructure, and investment promotion mechanisms already provide an important foundation for this transformation.

“In the next stage, the main focus should be on integrating these opportunities into a unified economic system, developing complementary production and service sectors among economic centres, and establishing regional value chains. If these policies are implemented successfully, the Middle Corridor could become not merely a means of increasing Azerbaijan’s transit revenues, but one of the key drivers of the non-oil industry, exports, and foreign investment attraction,” says the report.

The Middle Corridor is a multimodal trade and transport route connecting Asia and Europe through Central Asia, the Caspian Sea, Azerbaijan, Georgia and Türkiye. The route begins in China and runs through Central Asia before crossing the Caspian Sea and continuing through Azerbaijan, Georgia and Türkiye to European markets.

The Middle Corridor is being developed as an alternative to traditional northern and southern transport routes, providing connectivity between Asian markets, including China, and Europe. The World Bank says targeted investments and reforms along the corridor could significantly increase trade volumes and reduce travel times by 2040.