Icheri Sheher (Old Town) Historical-Architectural Reserve, located in Azerbaijan’s capital of Baku, is a UNESCO World Heritage Site and a major Azerbaijani tourist attraction. This small town has managed to preserve its ancient architectural and cultural heritage throughout the centuries.

Until Azerbaijan’s early 20th-century oil boom, Old Town constituted all of Baku. Today, with the increasing construction of skyscrapers and other modern structures, Old Town has become a tiny part of the capital. Old Town is surrounded by huge walls that separate it from modern Baku.

In 2005, in order to protect Old Town, President Ilham Aliyev signed a decree declaring the area a Historical-Architectural Reserve under the Ministry of Culture and Tourism of the Republic of Azerbaijan. This step toward preserving the cultural center of Baku has been an important factor in Azerbaijan’s developing tourism industry, and in Azerbaijan’s economy as a whole.

Old Town now is home to quality hotels, gourmet restaurants, international organizations, big oil companies, and diplomatic institutions—and it is a huge attraction for tourists in Baku. Old Town has about a dozen significant cultural monuments, including the intriguing Maiden Tower, Shirvan Shah’s Palace, and the Mohammed Mosque, one of the oldest mosques in the Baku area.

21st-century urban-planning advisors have recommended that Baku develop its tourism sector around Old Town. This historic center, these experts suggest, will attract more tourists than any other place in the city.

In 2009, 198,000 foreign tourists visited Old Town, where they spent a total of $4.5 million. That same year, just 1.4 million tourists in total visited Azerbaijan. Thus Old Town hosted more than 14% of all 2009 foreign tourists. By the end of 2014, the number of foreign tourists is expected to increase up to 417,000, and these tourists’ expenditures are expected to rise to $11.1 million. New entrepreneurs have an opportunity to start businesses including, malls, hotels, restaurants, art galleries, and even small souvenir and handcraft shops.

The question arises, what is the role of the government in development of cultural tourism in Old Town?

First of all, the government should create high business incentives in the tourism sector. The government can achieve business incentives by creating a competitive market among businesses, which, in the end will lead to low costs and higher service. Offering tax credits and business credits for new businesses in Old Town further will enhance the economy.

Second, the government must invest in developing and rehabilitating Old Town cultural monuments, museums, and theaters. Integration of cultural festivals into the Old Town will utilize the investment in rehabilitation and increase the tourist flow.

As the tourist and institution numbers increase in Old Town, the number of residents decreases. The population of 5,000 in the early 1990s decreased to just 3,000 residents by 2006. Thus, we can assume that the number of residents will continue to decrease as the number of Old Town hotels and restaurants increases. This is a strong indicator to support the statement that Old Town is fast becoming the cultural-tourism backbone of Baku.

Post written by Elchin Abdullayev, Karabakh Foundation Analytical Economics Intern, Senior Undergraduate Student of Economics at George Mason University, and president of Azerbaijani Youth of America 

In oil-rich Azerbaijan, the economy has been developing very quickly in the past decade. The former Soviet Republic has been holding a high place in the GDP growth rate among world countries, from the late 1990s until 2010, including the first places from 2005 to 2007. Azerbaijan ranked the first for average annual GDP growth rate from 2005 to 2009. In the early 21st century, country’s GDP went up from $ 6.2 billion in 2002 to $ 51.7 billion in 2010 with a national debt equaling only six percent of the GDP.

As the economy grows, the government of Azerbaijan is taking initiatives to develop different sectors, one of which is cultural development. The Ministry of Culture and Tourism of Azerbaijan is responsible for the country’s cultural development, specifically in the literature, music, theater, cinema, fine arts, architecture, and cultural tourism.

Investments in cultural development do not only contribute to social and cultural development of the country, but also has a huge impact on the economy itself. Azerbaijan’s victory at Eurovision, the most popular and largest song contest in Europe, is a good example of the outcome of such an investment. As the winner of the 2011 Eurovision contest, Azerbaijan will host the next Eurovision in the capital city Baku in May, 2012. Azerbaijan expects to host up to 60,000 tourists, during the contest. According to the World Tourism Organization an average tourist spends $600 to $700 in Azerbaijan. Ignoring the specific Eurovision related consumptions (tickets and similar) of the tourists, Azerbaijan will have nearly $40 million revenue, during the Eurovision song contest. This is almost 25% of the annual tourism revenue that Azerbaijan had in 2007. Other than the huge revenue Azerbaijan will gain from hosting Eurovision, it is a great opportunity for the country, especially for Baku, to introduce its rich heritage to Europe.

Tourists from Europe and other places, will have an opportunity to see old and modern juxtaposed in one, one part of the city Icheri Sheher (Old City) still preserves its ancient architecture, while on the other side of the city, the brand new, $100 billion dollar Khazar Islands project, where the Azerbaijani Tower, the world’s largest building is being built. Baku alone hosts a large number of tourism sites, especially Icheri Sheher (the Old City), the History Museum and the Carpet Museum, various art galleries, Maiden Tower, Yanardag (the Flaming Mountain) and the Shirvan Shah’s Palace.

Another huge contribution to country’s tourism development is just starting to develop. Azerbaijan submitted 2020 Summer Olympics bid in September, 2011. Preparations for 2020 Summer Olympics have already started. The National Olympic the Committee of Azerbaijan is investing a sizable amount of money in construction for this purpose. Several venues as, the Baku Olympic stadium with capacity to seat 65,000 people, hockey and wrestling arena and an aquatic center are to be completed by 2016. The committee is yet to announce how many tourists Baku expects to host in 2020 Olympic games, as they have to go through bidding process first in order to become the official host city for 2020 Summer Olympic Games.

Azerbaijan’s geographical, geopolitical location, climate, medical, mineral and thermal springs and rich culture gives it great tourism development opportunities. Every region has specific tourism perceptive, one of which is the Nagorno Karabakh region of Azerbaijan. Nagorno Karabakh has always been famous for its exquisite carpets, architectures, and special breed of horses designed for racing. Karabakh carpets preserved this popularity for centuries and they are still welcomed with special interest throughout the world. This region is also a homeland to famous writers and musicians. Musicians like Uzeyir Hajibeyov who introduced opera to Muslim world, and many others contributed to popularity of Azerbaijani culture.

Other than the tourism potential of the region, it would be worthwhile it mention that Karabakh always produced one of the highest value added among the regions of Azerbaijan. The region is also one of the richest in country, for its natural resources. Nevertheless, it was impossible for Azerbaijan to develop neither tourism nor any other sector in the Karabakh region due to ongoing Armenian occupation of it, and surrounding regions.

In many developed countries cultural development has a remarkable impact on economy. As an example, cultural industries produce 7.4% of GDP in Canada, where it employs more than 1.1 million people. According to the Michigan Department of History, Arts and Libraries, investment in cultural development in Michigan State, creates more jobs than many other sectors. Thus, from economic perspective cultural development of the country is as much important as any other sector. The young Azerbaijan understands this importance and takes initiatives to develop its cultural industry alongside with every other part of economy.

Post written by Elchin Abdullayev, Karabakh Foundation Analytical Economics Intern, Senior Undergraduate Student of Economics at George Mason University, and president of Azerbaijani Youth of America 

This post is also available in German and Turkish.