Economy

Reforming the WTO is a Long and Complicated Process

Published

4 years ago

December 19, 2018

Since early autumn 2018, the issue of reforming the World Trade Organization (WTO) has become an increasingly visible item on the global economic agenda. It was one of the central questions posited in the final communique of the G20 Summit that took place in Buenos Aires on November 30 – December 1, and the parties intend to tackle it again at the next meeting in Tokyo.

The WTO is traditionally considered the third institution of the Bretton Woods system. However, while the first two – the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD) – started functioning shortly after the end of World War II, it took 47 years of excruciating negotiations to create the third part, a universal trade organization. The establishment of the WTO in April 1994 following the Uruguay Round of negotiations (1986–1993) should rightly be considered the greatest event in economic relations in the 20^th century. However, the tremendous success had a certain reverse side: contradictions and issues between member countries remained. This predetermined the future need to reform the WTO.

Trade Wars are a Signal for Action

The problem of the institutional reform of the WTO has been discussed at the level of experts for at least the last 15 years. However, it has never gone beyond the scope of an academic discussion, and for serious reasons too. The older generation of trade diplomats and experts remembers all too well the excruciating negotiations at the Uruguay Round, which were accompanied by crippling crises and contradictions between the parties. Hammering out compromises was a Herculean task, and the agreement on establishing the WTO crowned those compromises.

It is precisely because of these features of the WTO’s protracted birth that representatives of various countries, recognizing the need to reform the organization, were fully cognizant of how difficult and risky such a reform will be in practice. That is why each and every time discussions ended the same way: the GATT/WTO system has been functioning for 70 years, and even though it has its problems, no one can guarantee that a reform will not make things worse. Nowadays, the situation has been noticeably radicalized due to the new U.S. protectionist policies and the trade wars it started “with the entire world.”

The Administration of the 45th US President has embarked upon a course of open criticism and attacks on universal trade rules. In late February 2017, the United States Trade Representative (USTR) delivered the Trade Policy Agenda and Annual Report to Congress. The document emphasized that given the “unfair trade practices” of other countries, the United States can disregard the WTO rules and conduct a more “aggressive” trade policy in protecting its national interests.

On June 1, 2018, Washington imposed increased import tariffs on metals from the European Union, Canada and some other countries to 25 per cent for steel and 10 per cent for aluminium. The current U.S. administration believes that domestic steel production has fallen sharply in the recent years, and this threatens national security. However, Europe and Canada see the legal justification for Washington to increase tariffs as being completely unacceptable.

Partners Reject U.S. Protectionist Measures

Within the WTO, each country has its commitments based on the rules developed during the Uruguay Round. These rules allow import restrictions in three very specific situations: in cases of dumping; the use of illegal subsidies; and if there is a threat to national industries due to a sharp increase in imports. In each case, the damage from the above-stated actions of a supplier country must be substantiated. The damage is assessed in the course of an appropriate transparent investigation that involves all the parties. The current U.S. measures do not fit into any of these scenarios, and instead it is being justified by “reasons of national security.” This, however, gives the matter an entirely different legal twist.

The WTO legal framework does stipulate restricting market access for reasons of national security: appropriate measures are possible in cases of illegal trade in weapons and nuclear materials, the danger of armed conflicts, a terrorist threat, etc. Therefore, in such cases, every state itself determines the measures for restricting access to its market under Article XXI of GATT, which is devoted entirely to “reasons of national security.” The difficulty with applying Article XXI of GATT is that its application mechanism is still not quite specific; a state that introduces restrictions under this article acts as the ultimate judge in the dispute.

The United States offers a very subjective formulation of “reasons of national security” that is clearly detached from the current international rules. Washington sees a threat to national security in the sharp drop in domestic metal production, even though such a situation is essentially a consequence of regular international competition.

European countries and Canada were shocked by the fact that the United States imposes tariffs against them out of “reasons of national security.” As the President of the European Commission Jean-Claude Juncker emphasized, “these unilateral U.S. tariffs are unjustified and at odds with World Trade Organization rules. This is protectionism, pure and simple.” President of France Emmanuel Macron called the U.S. administration’s decision illegal and mistaken. Prime Minister of Canada Justin Trudeau spoke rather sharply at the June 2018 G7 Summit in Quebec calling Washington’s measures “punitive,” “unacceptable” and “insulting.”

Following repeated attempts to convince Washington that its protectionist measures were unfounded, in late November 2018, the European Union, along with China, Canada, Norway, Mexico, Russia and Turkey, and then India and Switzerland filed a complaint against the United States with the WTO’s Appellate Body concerning the illegality of the steel and aluminium tariffs imposed by the United States. In the complaint, the plaintiffs intend to challenge the U.S. tariffs as protective and simultaneously prove that the United States cannot invoke reasons of national security. This demarche against the United States by nine countries at once is a rather convincing proof that the WTO’s leading members are resisting Washington’s attempts to revise the existing rules of international trade.

Thus, the U.S. administration believes that it can protect its domestic market and ensure its foreign trade interests on the basis of its domestic trade legislation. Over the course of 2018, Washington primarily invoked two legislative acts. Under the Trade Act of 1974, the United States can impose penalty tariffs on countries that discriminate against American goods. The second is the 1962 Trade Expansion Act that allows the United States to restrict import of goods that would “threaten to impair the national security.” This act served as a legal justification for Washington to increase import tariffs on steel and aluminium starting June 1, 2018.

Europe, Canada and Japan believe that using legal acts that are over 50 years old is odd at the very least, since in the intervening decades, international economic regulations have changed drastically, the principal change being the emergence of a full-fledged multilateral regulation institution, i.e. the WTO, which was to a great degree promoted by the United States. Strictly speaking, the moment the WTO became operative in January 1995, the United States did not invoke the provisions of those domestic acts since it believed itself to be bound, like other WTO members, by the WTO’s commitments.

Every Side has its Arguments on Reforming the WTO

In March 2018, the United States Trade Representative Robert Lighthizer presented the latest version of the U.S. administration’s annual agenda in trade policies. The agenda concerns such issues as reforming the WTO, trade agreements with other countries and the application of U.S trade laws. The document is critical of the trade policies of previous administrations and simultaneously claims to reach a qualitatively new level in trade policies under the Trump administration.

Lighthizer’s report states that the U.S. administration is dissatisfied with the existing rules and their application in such areas as labour conditions, competition policies and the medical equipment market. It notes the investigations of U.S. officials into China’s violations of U.S. intellectual property rights. In essence, the report justifies instances of applying U.S. trade laws from the 1960s–1970s in order to protect national security interests, which cannot but cause concerns, since these laws are applied separately from the WTO rules and the commitments that the United States has undertaken as part of the organization.

As for the current multilateral negotiations at the Doha Round, Washington has specific grievances in that area, which may be considered justified to a certain extent. For instance, the United States is not satisfied with their highly stilted character, the impossibility of achieving new agreements other than at the biennial WTO ministerial conferences, and what the United States views as the outdated agenda of the Doha Round.

What is more, in recent years, the United States has not hidden its displeasure with the position of a large group of countries within the WTO which, having joined the organization as developing countries, continue to see themselves as such today, despite the fact that they have made significant progress in a number of economic sectors and even outstripped certain developed countries. In addition to this, many developing countries have non-transparent trade policies. Consequently, those WTO members de facto use privileges that Washington deems to be unjustified, which blocks progress in developing new WTO rules and also impedes further liberalization. This is the essence of Washington’s approach to reforming the WTO: eliminate unjustified and unfair privileges held by a group of developing countries that today essentially paralyse the multilateral trade system.

As for the other major player in international trade – the European Union – it has assumed a highly proactive stance on the issue of reforming the WTO. The European Union was the first to publish a list of specific proposals (a concept) on reforming the WTO. Analysing the entire list is rather a task for trade policy experts. It would therefore be appropriate to single out the key points. Even though the European Union’s stance was originally a direct consequence of the wrongfully protectionist measures of the United States towards European manufacturers, the document contains no direct or indirect complaints against Washington, which is largely reasonable, since reforming one of the key institutions of global economic management is too grave an issue to start it by settling scores with an old trade partner.

Essentially, Brussels shares Washington’s position on the matter, as well as its grievances against that group of developing countries that has reached a rather high level of economic development, but has no wish to part with their previously gained privileges

The EU proposals also note that today’s discussions are frequently dominated by the opinion that global trade rules somehow impede trade and, therefore, developing countries need to be exempted from both current and future rules. In fact, today, the differences between developed and many developing countries are not quite as pronounced as they were 25 years ago, when the WTO was established, meaning that the above-mentioned opinion is fundamentally wrong. Obviously, some flexibility in enforcing the compliance of developing countries with the WTO rules should be preserved, but only in those cases where it is necessary. The proposals put forward by Brussels contain specific mechanisms for tackling this task.

The EU concept focuses heavily on modernizing the WTO’s Appellate Body, a crucial organ in the mechanism of resolving disputes within the WTO. The European Union’s stance on the matter was supported in November by Canada, India, Norway, New Zealand, Switzerland, Australia, South Korea, Iceland, Singapore, Mexico and China.

In its proposals on the Appellate Body, Brussels largely takes Washington’s grievances against its current functioning into account. In particular, the European Union proposes limiting the appeals term to 90 days, which had been stipulated earlier, yet the parties often failed to comply with the requirement.

The EU concept also contains a series of initiatives on bolstering the multilateral trade system and improving the efficiency of the WTO.

China, which has been striving to form a united front with other countries that condemn Washington’s protectionism, has also called for a reform of the WTO.

While supporting WTO reform, China has thus far limited its actions to fairly general statements, stressing that the importance and inviolability of the WTO’s basic principles and rules. It would seem that Beijing is unlikely to be unconditionally receptive of Washington’s demands that current privileges for developing countries in the WTO be abolished. In contrast, China will rather put forward the need to fight protectionism, which is a threat to free trade.

As for Russia, it wholeheartedly supports the idea of reforming the WTO. President Vladimir Putin and Minister of Economic Development Maxim Oreshkin recently declared this stance. Russia’s trade diplomacy has quite good positions to take an active part in the process.

In conclusion, we need to emphasize that the nascent process of reforming of the WTO cannot be simple and quick, since the list of problems is too variegated. Above, we have outlined only some of these problems. At a certain stage, the most difficult problem will likely be that of transforming the decision-making system. The consensus mechanism that has been in effect in the GATT/WTO for over 70 years clearly hampers decision-making today, as the organization boasts 164 member countries. However, abolishing this mechanism will not be easy either. This is probably the main challenge to the incipient WTO reform.

First published in our partner RIAC

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Economy

Price hike in Pakistan: the worst of all worries

Published

4 hours ago

March 22, 2023

Nadir Ali

The most serious issue Pakistan’s economy is currently dealing with is price increases or inflation. Life has become miserable for the average person as a result of the ongoing increase in the cost of necessities like food, fuel, and medicine. The general public’s standard of living is not the only thing this phenomenon is affecting; it is also fueling social unrest across the nation.

There are numerous factors contributing to the price increase. The rise in the price of oil on the global market comes first. Pakistan relies heavily on imported oil, and when the price of crude oil increases globally, it has a negative impact on the regional economy. The issue has also been exacerbated by Pakistan’s struggling economy, high-interest rates, and currency devaluation.

However, several causes can be identified for Pakistan’s dollar exchange rate’s ongoing rise. One of the main causes is the nation’s substantial import bill, which raises the demand for dollars. Energy and other necessities must be imported into Pakistan, and the pressure on its foreign exchange reserves is increased by the high demand for dollars to pay for these imports. Further weakening Pakistan’s currency is the fact that its exports have not been able to keep up with its imports, resulting in a trade deficit. Due to investors’ reluctance to invest in a nation with an unstable economy, political unrest, and economic ambiguity have also boosted the dollar rate.

Similarly, the debt incurred by Pakistan is a sizable additional factor in raising the dollar rate in that country. Pakistan has one of the highest debt-to-GDP ratios in the world and has borrowed a significant amount of money from international financial institutions to meet its financial needs. The pressure from this borrowing has reduced the nation’s foreign exchange reserves and devalued its currency. The country’s economy has been severely impacted by the COVID-19 pandemic, necessitating a significant fiscal stimulus on the part of the government. This has further aggravated the situation. In Pakistan, the dollar rate has been rising steadily as a result of all these factors working together.

Simultaneously, inflation and price increases affect Pakistan’s politics as well as its economy. The opposition parties are using the government’s inability to control the price increase as a major issue to attack it and win over the public. The opposition parties are protesting and demonstrating against the government, accusing it of being responsible for the price increase. They contend that the general populace is suffering because the government’s policies have failed to control inflation. The price increase controversy is being manipulated by the opposition to advance their own political goals and turn the public against the ruling party.

The government, on the other hand, is making an effort to address the issue by implementing a variety of measures, including raising subsidies for necessities and lowering import taxes. However, the opposition parties are utilizing this failure to their advantage because these measures have failed to contain inflation. Similarly, the price increase has important political repercussions. Public support for the opposition parties is growing, while support for the government is eroding. If the government is unable to control the price increase, it may trigger more political unrest, demonstrations, and even violence.

Therefore, a price increase has far-reaching effects. The groups with lower incomes are most negatively impacted because they cannot afford the necessities of life. They are compelled to reduce their food intake as well as their health and education spending. The middle class is also suffering. After all, they must second-guess any major purchases because their purchasing power has significantly dropped.

In addition to economic issues, the price increase is also creating social ones. As they struggle to meet their basic needs, people are growing agitated and desperate. Riots, demonstrations, and protests against the government are being sparked by this annoyance. As people struggle more to make ends meet, inflation also causes a rise in the crime rate.

The government must act swiftly and effectively to stop the price increase. Controlling the hoarding and smuggling of essential commodities is the first step. Second, to lessen their reliance on imports, they must make investments in regional industries. Additionally, the government should prioritize economic expansion because it can result in more job opportunities and, ultimately, greater purchasing power for the average citizen.

The government needs to pay attention to it right away and take action. The stability of the nation’s social and economic systems is in jeopardy, and if the issue is not quickly resolved, it might fuel more unrest and instability. This issue requires both political and economic solutions. The public must see that the government is acting practically to control inflation by effectively communicating its policies to them. Furthermore, the opposition parties should cooperate with the government to find a solution rather than use the price increase issue for political purposes.

To address the issue, the government must take a comprehensive approach that includes both immediate and long-term actions. The private sector and civil society can both be crucial players in finding solutions to the issue. The only way the nation can hope to overcome the problem of price increases and guarantee a higher standard of living for its citizens is through collective effort.

The opposition parties should work with the government to find a solution to this issue, as the government must act quickly and effectively to control inflation. The common people’s lives are being impacted by the price increase, and resolving it will require a collaborative effort from all parties involved. The federal government ought to prioritize long-term economic plans that can boost employment opportunities, reduce reliance on imports, and promote sustainable economic growth. To encourage trade and commerce, the government ought to work on enhancing the infrastructure, such as the roads and communication systems.

Additionally, the government needs to take strict action against anyone hoarding, smuggling, or profiting from the situation in order to make extra money. In order to boost production and lessen reliance on imports, the government should also support local industries by offering incentives and support.

Economy

Vietnam’s macroeconomic policy and post COVID recovery

Published

6 hours ago

March 22, 2023

Prof. Pankaj Jha

As per the latest IMF reports real Gross Domestic Product(GDP) of Vietnam in 2023 is estimated at 6.2 percent. This clearly shows that Vietnam has been avoiding the usual recessionary trends across the Asian markets and is showing better than average growth .With inflation rate being less than 4 per cent, it clearly shows that Vietnam is likely to emerge as a promising economy in Asia. According to the regional economic outlook which has been released by the IMF , it clearly projects that there are high expectations of uncharacteristic slow down in China benefitting competitors such as Vietnam, Philippines and Indonesia .

Asian Development Bank(ADB) has forecasted that Vietnam’s GDP was expected to grow by 6.5% in 2022 and nearly 6.7% forecasted for the year 2023. If one looks into the comparative forecast for countries in Southeast Asia it is stated that Philippines will grow by 6.3 per cent ,Cambodia 6.2 per cent ,Indonesia 5 per cent, Thailand 4.2 per cent , Laos 3.5 per cent ,and so on. If one looks into the core fundamentals of Vietnam following the COVID-19 pandemic, it has been clearly stated that Vietnam’s annual economic growth rate hovered between 6.3 per cent to 6.5 per cent for the decade preceding the current one.

One of the major aspects of this better than average economic growth was high foreign direct investment, increased domestic consumption, sizeable increase in the middle class, and Vietnam’s focus on promoting its manufacturing to be export oriented. In terms of other critical aspects Vietnam has been securing loans from many other international agencies over the past few years. With funding and grants from different international economic agencies ,Vietnam has been able to upgrade its road, rail transport and border connectivity infrastructure along with promoting social economic growth of nearly 243,000 people across the provinces.

One of the mainstays of Vietnam economy has been small and medium enterprises along with active participation of women.These enterprises have been getting bank credit and technical assistance through different initiatives such as public private partnerships, promotion of private sector development, and extensive reforms in state owned enterprises. Vietnam has been preparing well for facing the severity of climate change and also undertaking pilot projects for post disaster reconstruction and rehabilitation. It has institutional arrangements with World bank and Netherlands to develop resilience for the coastal areas particularly Mekong delta to undertake comprehensive efforts in mitigating the climate change effects.

Over a period of time Vietnam has been making serious efforts in emerging as a knowledge network society. This includes improving policy applications, enhancing capacities of stakeholders and providing information to the communities on a regular basis. Vietnam has also received more than USD $ 2 million grant for climate resilient inclusive infrastructure through high technology fund from ADB. In terms of meeting UN sustainable development goals, Vietnam has successfully provided electricity to its cent percent population.

It has been stated that Vietnam is one of the economies which is going to benefit from Regional Comprehensive Economic Partnership(RCEP) given the reduction in tariffs during the period 2020 to 2035 and because of these reductions the export of electrical equipment and machinery from Vietnam is going to grow to the level of 12.1% while the main stay of its exports primarily textiles and apparels are going to grow by nearly 10%. Given the fact that RCEP would facilitate Vietnam’s entry into high end markets such as Japan, Australia and New Zealand might translate into better trade revenues.

In fact better integration with regional economies would promote its sectors such as tourism, entertainment, education, agriculture, automobile telecommunication, and IT. Two different aspects have gained international attention because of Vietnam ranked 70^th out of 190 countries in terms of ease of doing business, and its major strength has been the young population as nearly 70 per cent of its population is aged between 15 to 64. This large working population reduces social security liabilities to the aging population. Major work which has been done by the current Vietnamese government is its national strategy for Environmental Protection 2030 with a comprehensive plan under Vision 2050.

It is expected that Vietnam’s construction sector is going to grow because of increase spending on infrastructure projects along with improvement in regional connectivity through rail, road, and air transport infrastructure. There are high expectations that Vietnam tourism sector will post impressive recovery, and last year the country witnessed an increase of tourist arrivals by more than 185 per cent in the first four months of 2022. The tourism sector is going to increase further given the fact that Vietnam has signed a comprehensive agreement in boosting sustainable tourism and post COVID recovery at the national level. During the period 2022 to 2025 it is expected that the cumulative average growth rate of tourism would be 13.5% average each year .

As per the global data set and the General Statistical Office of Vietnam, the industrial production is also going to increase substantially and export orders as well as internal domestic demand is going to bring about remarkable improvement in production as well as exports. Last year, the G7 countries have agreed to grant a loan of US $5.5 billion for helping Vietnam transition from coal to other sources for power generation. This was based on the promise that Vietnam should make plans for shifting to nearly 50 per cent of its power requirements from renewable energy by the year 2030. It is also expected that foreign direct investment in Vietnam is going to be steady with high tech industries, knowledge based service industries, and education gaining the maximum investments. The real estate and construction sector are other sectors which are going to gain international attention.

This year it is expected that public investment would be helpful in post pandemic recovery and under the Socio Economic Recovery and Development Programme nearly US $15.4 billion has been approved for accelerating the economic growth. Furthermore, commodity exports is likely to see a remarkable two digit jump and the FTAs that Vietnam has signed with various partners will help in building the capacities of Vietnamese manufacturing sector in product transformation, exploring diversified markets, better restructuring, and skill development at different levels. The transformation is also happening in terms of fiscal and monetary prudence as well as undertaking reforms within banking system and financial governance. The anti corruption drive that the Vietnam has undertaken in the last few years have built the investor confidence and it is expected that Vietnam will reap the dividends of better business environment, market connectivity, and relatively comparative advantage among other competitors in Southeast Asia. As expected the fundamentals are getting stronger, and therefore Vietnam can witness a stronger economic growth and better macroeconomic stability in the year 2023.

Economy

Azerbaijan’s Favorable Climate for Foreign Investments

Published

7 hours ago

March 22, 2023

Kanan Mammadov

Azerbaijan, situated at the crossroads of Europe and Asia, presents investors with plentiful opportunities, chiefly in the area of oil and gas, tourism, and agriculture, as well as policies developed to stimulate foreign investment and enhance the investment environment. Furthermore, Azerbaijan invested in order to gain access to additional markets and strengthen its presence in the international economy, and the country has committed capital to sectors such as energy, real estate, infrastructure, and tourism.

Azerbaijan’s economy has seen an impressive rate of growth over the past decade. According to the World Bank, the country’s Gross Domestic Product (GDP) increased by 1.4% in 2020, despite the global pandemic. This serves as a testament to the fortitude of Azerbaijan’s economy, which has endured multiple economic disturbances in the past. Estimations suggest that Azerbaijan’s Gross Domestic Product is approximately $54 billion, with an average annual increase of 1.9% over the past four years. Azerbaijan has experienced a steady low rate of unemployment over the past decade, with an average of 5%, indicating a strong labor market and a prosperous business environment.

Azerbaijan has cultivated wise investments in fields that demonstrate promising growth and profitability. The efforts of the nation to broaden its economic base have proven successful, resulting in a decrease in its reliance on petroleum. Azerbaijan has achieved notable success in diversifying its economic base and diminishing its dependence on oil exports. The non-oil exports of Azerbaijan have been rising continuously in the recent years; as reported by the Azerbaijan Export and Investment Promotion Agency (AZPROMO), there was a 47.2% ($2713.40 million) and 12.3% ($3047.67 million) increase in 2021 and 2022 respectively. Between January and February of 2023, the country recorded an increase of 36.6% in non-oil export earnings, amounting to approximately $651.42 million, compared to the same period the year before.

Multinational corporations from around the world are highly eager to access Azerbaijan’s natural resources, mainly its oil and gas reserves. In 2020, Azerbaijan’s oil production reached 33.5 million tons, followed by 29.5 million tons and 32.8 million tons in 2021 and 2022 respectively, as reported by the State Oil Company of the Republic of Azerbaijan (SOCAR), thus placing the nation among the major oil-producing countries in the region. Oil production is projected to reach 35 million barrels in 2023. According to the Oil and Gas Journal, Azerbaijan has more than 2 trillion cubic meters of natural gas reserves, representing a significant opportunity for energy companies worldwide.

In 2020, Azerbaijan attracted a total of $4.5 billion in foreign direct investment (FDI):

Azerbaijan saw a 5.9% increase in Foreign Direct Investment (FDI) compared to the past year, which made it one of the most prominent FDI recipients within the Commonwealth of Independent States (CIS) area. In 2020, the United Kingdom, Turkey and the United States were the top three countries by FDI in Azerbaijan, with the United Kingdom contributing $1.7 billion, Turkey investing $577 million and the United States investing $475 million, according to the Central Bank of Azerbaijan.

Furthermore, the Sustainable Development Goals (SDG) Index reveals that Azerbaijan has made substantial strides in reaching the objectives that were put in place by the United Nations across multiple domains. According to the SDG Index, the rate of global poverty has decreased from 49.6% in 2010 to 5.9% by 2022. Azerbaijan’s Global Hunger Index (GHI) has seen a positive trend, decreasing from 14.5 in 2010 to 9.7 in 2019 and further to 7.5 in 2022. The citizens of the country have reaped the benefits of its efforts to bolster health and well-being, as evident by the increase in life expectancy from 68.6 years in 2010 to 73.3 years in 2022. Azerbaijan’s commitment to improving the standard of living for its people and promoting economic growth in a sustainable manner are reflective of its commitment to the achievement of the Sustainable Development Goals.

In 2019, Azerbaijan achieved a ranking of 25th place in the World Bank’s Ease of Doing Business report, which marks a notable enhancement of 32 places from the previous year and highlights a favorable business climate for foreign investors. In 2020, the World Bank’s Ease of Doing Business Report ranked Azerbaijan 34th among 190 countries, with a score of 76.7 for the ease of setting up a business.

Taking all factors into consideration, Azerbaijan is a highly attractive investment opportunity for a variety of industries, including energy, tourism, agriculture, and technology. In order to stimulate foreign investment, the government has put in place a variety of incentives to simplify the foreign investment process. Azerbaijan is an attractive option for investors to expand their investment portfolios and explore new markets due to its attractive business environment, strategic location, and robust economic growth. Moreover, Azerbaijan’s foreign investments have had a considerable influence on the nation’s economic growth. The country has leveraged investments to expand its portfolio and reduce its reliance on oil and gas industries, as well as to access novel markets.