Fiscal incentive mechanisms for increasing the attractiveness of foreign investments in the post-conflict territories of Azerbaijan

Abstract

Following the restoration of the territorial integrity of the Republic of Azerbaijan, a new stage of development has begun in the economic regions of Karabakh and East Zangezur. The socio-economic revival and sustainable development of these territories are possible not only through state investments but also through the inflow of private and foreign capital. Fiscal incentive mechanisms play a crucial role in shaping a favorable investment climate. This article provides an in-depth analysis of the fiscal instruments that can be applied to attract foreign investment to Azerbaijan’s post-conflict territories. Within the context of international experience, the role of tax exemptions, subsidies, customs privileges, and insurance mechanisms is evaluated. The research shows that fiscal mechanisms are critical not only for economic development but also for ensuring social stability and reintegration. The paper examines Azerbaijan’s current legal and economic framework in this area, investor risk factors, legal stability issues, and transparency criteria, and provides specific recommendations to address the main challenges facing foreign investors. Examples of successful fiscal incentive mechanisms applied in various countries around the world are also presented.