BAKU, AZERBAIJAN (28 October 2022) — Azerbaijan has great potential to further develop its ecosystem for tech startups through improved agency coordination, legal and regulatory reforms, investments in education, and support for emerging startup hubs outside the capital of Baku, according to a new report by the Asian Development Bank (ADB).

The country has an extensive support system for tech startups, but growth in the sector has been slow and was further hampered by the COVID-19 pandemic, according to the report, released today. While tech startup hubs in the country are commonly located only in Baku, the study found that innovation efforts at Ganja State University, Azerbaijan State Agriculture University, and Azerbaijan Technological University, as well as in the city of Shamakhi, signaled potential for development outside the capital.

One of Azerbaijan’s 2030 national priorities for socioeconomic development is the creation of competitive human capital and space for modern innovations, fortifying the 2015 Strategic Roadmap for the Development of Telecommunication and ICT.

“With these overarching plans already in place, what’s needed is to coordinate support, provide key financial incentives to the Baku ecosystem, and set targeted policies for the Ganja and Shamakhi ecosystems to enhance the national tech framework and encourage innovative thinking,” said ADB Economist Aimee Hampel-Milagrosa, the report’s lead author.

To sustain Azerbaijan’s momentum, the report recommends improving efficiency and increasing coordination among government agencies supporting tech startups; reducing perceived risk for venture capitalists by addressing legal and regulatory gaps related to investment and taxation; investing in science, technology, engineering, and mathematics education, both in Baku and elsewhere; and tapping the potential of secondary cities through investments in digital infrastructure and the creation of supportive programs and policies.

ASAN, the State Agency for Public Service and Social Innovations, which provides nearly 500 electronic services; and Innoland, the country’s main institution for business incubation and acceleration, are examples of Azerbaijan’s successful forays into innovation and tech. Examining the growth model of the two may yield insights about how to shape emerging ecosystems in Ganja and Shamakhi, according to the report.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.

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