Improving connectivity, particularly in terms of local roads that reduce transport costs for products and people, a key input to promote private sector investment, rural productivity and access to economic opportunities, is a priority.

The development of main transport corridors, along with relevant logistical services, will improve connectivity and open way for producers to reach out to local and international markets in a faster and cheaper. Modernization of key highways and railways infrastructure is essential for the country to compete for more cargo transit in the region and capitalize on its strategic geographic position. As discussed in the analysis, regional integration and cross-border trade facilitation are key areas of opportunity for Azerbaijan to improve its business environment and spur greater private sector led growth.

Greater access to markets through improved local connectivity is important for promoting labor mobility and creating more opportunities for the poor and the bottom 40 to use their assets more productively. In particular, investment in local connectivity is key in terms of increasing productivity in the agricultural sector where increased access to markets could have long term impacts on stimulating rural incomes which will directly benefit the bottom 40. Finally, improved connectivity also impacts human capital accumulation – a key constraint discussed in the previous section- as it influences the demand for education and health services.