Old Town, New Baku: The Importance of Icheri Sheher in Azerbaijan

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