SMART SOLUTIONS

One of the most serious risks facing the global economy in the long term is climate changes. According to forecasts, an increase in the average annual temperature by only one degree will cause a more accelerated melting of glaciers and, as a consequence, increase the volume of water in rivers and flooding of fertile soils.

At the same time, the increasing global average temperature leads to droughts and washout of agricultural lands. Studies show that climate change will affect biodiversity over time, hence raising a number of relevant issues like food security. In this regard, many countries, including Azerbaijan, are reorienting their economies towards the maximum use of smart technologies in the so-called smart villages and cities.

Towards zero emissions

It has been proven that every degree above 34°C leads to an increase in the cost of animal husbandry and decreases productivity in this area. Studies show that by 2030, the amount of water resources will decrease by 20%, while the demand of plants for water will increase by 10%. This will decrease by several percent the share of cotton, grain and water-intensive products per hectare of area.

The report of the global insurance company Swiss Re on the impact of climate change on the global economy in the next 30 years contains some interesting points. Based on the analysis of stress test results, it shows the possible impact of climate change on 48 countries, which account for 90% of the global economy. The document compares scenarios with and without climate change and examines the impact of changes on global GDP in 2050. Verdict: global GDP will shrink by 18% over the next 30 years unless we take actions against climate change.

By realising the goals of the Paris Accord on climate change aimed at significantly reducing greenhouse gas emissions and limiting global temperature rise, the GDP decline can be kept within 4%. Research also shows that global warming increases the risk of natural disasters, resulting in significant declines in income and productivity.

It is estimated that if Russia and Turkey, Azerbaijan's main trading partners, achieve full implementation of the goals of the Paris Climate Conference, the GDP of these countries will fall by 3.2 and 2.5%, respectively. Otherwise, the fall in GDP will be 12.8% and 10.3%, respectively. The transition to a zero-emission economy, on the other hand, leads to deeper cooperation between the public and private sectors of the economy.

Swess Re's analysts have concluded that investments in infrastructure that guarantee zero emissions and use renewable energy sources are more profitable. In this regard, Azerbaijan's plans to develop the liberated territories based on the concepts of smart villages and smart cities with zero CO2 emissions should also be considered as a contribution to the fight against global climate change.

Full digitalisation

Over the past ten years, Azerbaijan has implemented quite ambitious environmental protection projects. Cleaning of oil-contaminated areas in Baku and the Absheron Peninsula, as well as the development of a new modern urban infrastructure in one of the districts of the capital, which for many years had been known as the Black City, are considered important achievements in architecture and the maintenance of environemtnal balance. On the other hand, the government of Azerbaijan encourages the expansion of the industrial potential of the national economy and applies a wide range of benefits for new enterprises created in the production chain. This is clearly seen in numerous benefits and preferences for residents of industrial parks and quarters. But! To enjoy all these benefits, it is not enough to have an investment initiative – investors need to comply with strict environmental standards in the production process. Thus, when creating new production facilities, the Azerbaijani government relies on generally recognised standards established by the Equator Principles, developed by the World Bank as part of a set of core requirements for the projects funded by WB.

As the Azerbaijani Minister of Economy Mikail Jabbarov reported earlier, the government has adopted and is currently developing a number of programs aimed at digital transformation of the national economy. Thus, in February 2021, the government approved the National Priorities for Socio-Economic Development of Azerbaijan till 2030, which includes five main directions, including the development of clean environment and a “green country”. “Due to the pandemic and complex global economic processes, digitalisation will undoubtedly bring a practical value in a post-pandemic environment,” Mr. Jabbarov noted.

The objective of all of these projects is to ensure Azerbaijan's participation in the global trend – the Fourth Industrial Revolution (Industry 4.0). Ultimately, this means the automation and robotisation of production, introduction of digital technologies in all spheres of the economy and public infrastructure, ensuring the least harm to the environment.

Smart concepts for Garabagh

Therefore, the projects of smart cities implemented in the regions of Azerbaijan liberated from the occupation will enhance security and provide innovation in the processes of environmental protection and biodiversity.

Despite the small share of global waste generated by the ongoing communication projects, this indicator will be higher if we consider their impact at the national and regional levels. Moreover, given that all projects in Garabagh are implemented from scratch, on a completely destroyed territory with the not completely known level of environmental damage, the volume of waste is likely to exceed the desired indicator. Therefore, the construction of infrastructure using ICT solutions will significantly reduce CO2 emissions. At the same time, maintaining the environmental balance and high tourist potential of the liberated territories will increase the attractiveness of this destination not only within Azerbaijan, but also in the world.

Among other things, the construction of smart cities in the liberated territories can reduce the migration of residents to the capital of the country. As Ruchir Sharma, head of the Emerging Markets Department of Morgan Stanley (USA), writes in his book The Rise and Fall of Nations, if the ratio of the population of a capital city to the second largest city in developing countries is 3:1, this can lead to an imbalance in the future and prevent economic development. According to Sharma, in order to maximise the advantages of their geographic location, countries must ensure that potential regions of the country, especially cities, are connected to the global trading system. In this regard, the development of the liberated territories using modern ICT technologies is an important factor in achieving balanced regional development.

Smart concepts also deepen the relationship between technology and citizens. In addition, the process will stimulate high quality education in the liberated territories. In other words, the ICT knowledge of a graduate of the smart village school in Aghaly (Zangilan) will differ from the knowledge of his peers from other regions of Azerbaijan. This will indicate the level of investment by the Azerbaijani government in smart concepts in order to develop more talented personnel in the regions.

A study by McKinsey on the results of the application of smart solutions in urban and agricultural management shows that these technologies reduce mortality (by 8-10%), increase the level of emergency response (by 20-35%), and reduce morbidity (by 8-15%), as well as reduce emissions (by 10-15%).

Thus, the restoration of Garabagh on the basis of smart technologies is fully consistent with both the objectives of the Paris Accord to combat global climate change, and the goals of developing Azerbaijan's economy and protecting biodiversity at the regional level. All these plans will indeed make Garabagh not only attractive as a cultural and tourist destination, but also an economic symbol of Azerbaijan.

60% of Azerbaijani companies will invest in digital transformation

Most heads of companies in Azerbaijan are planning investments in digital transformation, said Movlan Pashayev, managing partner of PwC in Azerbaijan.

He noted that PwC has conducted the 4th annual survey among CEOs of companies in Azerbaijan.

“According to our survey, 60% of companies in Azerbaijan plan to invest in digital transformation. 67% of these companies believe that the qualified, educated and adaptable workers are the main priority of business,” Pashayev said.

The survey included 121 executive directors of various companies operating in the country.

According to Pashayev, the survey indicates that company leaders in Azerbaijan believe that "digitalisation and professional development are crucial for future success in rapidly developing countries, whose economies are based on AI, robotics and other new technologies."