22 September 2023
The Economic Benefits of Peace in the South Caucasus
![The Economic Benefits of Peace in the South Caucasus](/sites/default/files/styles/general_sm_w340/public/2023-09/SSA-31-picture-blue-2023-09.jpg.webp?itok=lP0iT_WW)
22 September 2023
The Economic Benefits of Peace in the South Caucasus
By
Experts from Armenia and Azerbaijan
Key points
- The normalisation of Armenian-Azerbaijani relations would have a highly positive impact on these countries’ economies by reducing military expenditure; attracting foreign investment; and ensuring other positive consequences for public finances, foreign trade, energy and transport.
- Thanks to the ongoing tensions, defence spending continues to be proportionally higher than in much of the world.
- Similarly, foreign direct investment has been adversely affected, particularly in Armenia. Normalisation would encourage the diversification of the various economic sectors and attract a greater variety of investors.
- Generally, ending conflicts can decrease interest rates by at least 1.5-2 percentage points across various sectors of a country’s financial markets.
- The reopening of borders and the establishment of transportation corridors could have far-reaching implications for trade and connectivity in the region, leading to shorter and cheaper trade and transport routes that benefit both countries and the region as a whole.
The Armenian contributing experts are Armen M. Ktoyan, Albert A. Hayrapetyan, Ashot S. Aleksanyan and Vahram S. Petrosyan; the Azerbaijani contributing experts are Vasif Huseynov, Shahmar Hajiyev and Rusif Huseynov.
Disclaimer: The views, information and opinions expressed in this publication are the author’s/authors’ own and do not necessarily reflect those of the GCSP or the members of its Foundation Council. The GCSP is not responsible for the accuracy of the information.