THE IMPACT OF CREATING A FREE ECONOMIC ZONE IN THE NAKHCHIVAN AUTONOMOUS REPUBLIC ON LOGISTICS DEVELOPMENT

Abstract

This article examines the economic rationale, major impact pathways and development prospects associated with establishing a Free Economic Zone (FEZ) in the Nakhchivan Autonomous Republic. The primary objective is to assess how an FEZ could contribute to expanding transport connectivity, improving freight efficiency, modernising warehousing and customs services, realising transit potential, and developing integrated production and supply chains. Nakhchivan’s geographical position, economic relations with neighbouring countries, access to regional transport routes and local production capacity are considered key factors underlying the relevance of the research. The article systematically reviews international approaches to special economic zones, logistics and supply chain management, investment incentives, and digital customs procedures. Official statistics on Azerbaijan’s transport corridors are used to provide a national-level overview of freight transportation and transit activity. The analysis explicitly distinguishes national transport statistics from Nakhchivan-specific indicators, which should not be treated as interchangeable. The findings suggest that the potential contribution of an FEZ to logistics development depends not merely on tax and customs incentives, but on the coordinated development of transport infrastructure, logistics services, customs administration, local production and institutional governance. The article proposes measures to support logistics centres, multimodal transport, digital logistics platforms, local business participation in supply chains, and performance-based monitoring. It concludes that an appropriately planned FEZ could become an instrument for improving Nakhchivan’s logistics competitiveness and regional economic integration, provided that its establishment is supported by a sound feasibility assessment, adequate infrastructure, transparent regulation and measurable performance targets.