Silicon Island of the Caspian region: can we make it real?

Economy Materials 9 August 2017 11:40 (UTC +04:00)
Azerbaijan, the cradle of the first democratic republic in Muslim world where women took off the veil for the first time in an Muslim
Silicon Island of the Caspian region: can we make it real?

Baku, Azerbaijan, Aug. 9

By Azer Ahmadbayli – Trend:

Azerbaijan, the cradle of the first democratic republic in Muslim world where women took off the veil for the first time in an Muslim majority country now has to prove to the rest of the world that it is no longer “a former Soviet republic”, but the nation the world can successfully cooperate with.

Taking into account the 25-year-old Nagorno-Karabakh conflict, when no one from world political leaders dares oppose the powerful and wealthy Armenian Diaspora and strongly express their views based on international law, Azerbaijan has nothing to do but to reform itself in every way.

New technologies have always played a role of driver of economic development. Just remember movable-type printing press or diesel engine.

Some time ago President Ilham Aliyev called for transformation of the oil-oriented national economy into the one less dependent on hydrocarbons. This new initiative is now in progress. Within the scope of the new concept, Ilham Aliyev also decreed to establish a High-Tech Park in late 2012.

The High-Tech Park is located on the island of Pirallahi, not far from Baku. Its area covers 50 hectares as yet. The High-Tech Park LLC also passed the state registration. The companies operating in the High-Tech Park are exempt from tax and customs duties. Four types of tax incentives have already been approved by Parliament. The High-Tech Park’s residents are exempt from VAT for import of equipment, income, land and property taxes for a period of seven years.

Who will work in this High-Tech Park and generate brilliant ideas? Certainly, it will be the young Azerbaijanis – graduates of IT high schools and universities. No doubt, there are talented people among them, but are they skilled and experienced enough to move ahead with this business?

Azerbaijan has an ability to create ripe conditions for attracting highly-skilled brightest minds from India, China and elsewhere to support local IT community in the fields of internet, software, information services, manufacture of information and communication technologies etc. If this scheme goes big, it will heat up the economic environment and get the national economy further powered up. The most evident example of how this idea can be successfully implemented is Silicon Valley in the USA.

Let’s have a brief overview of the world’s leading innovation region, based on data from the 2017 Silicon Valley Index, the Silicon Valley Competitiveness and Innovation Project – 2017 Report, and other sources.

Fifty-seven percent of STEM (science, technology, engineering and mathematics) professionals with a bachelor’s degree or higher in Silicon Valley are foreign-born.

Foreign-born residents helped start new businesses that have generated billions in revenue and hired tens of thousands of workers. Foreign-born entrepreneurs helped start one-fourth of all new US engineering and technology businesses established between 1995 and 2005, including Google and eBay. In Silicon Valley more than one-half of business start-ups over the period involved a foreign-born scientist or engineer; one-fourth included an Indian or Chinese immigrant.

Over the past 20 years, the number of Silicon Valley patent registrations in Computers, Data Processing and Information Storage has increased tenfold.

Silicon Valley’s worker productivity remained the highest of the innovation regions in 2015. Average value added per employee was $231,000 per Silicon Valley worker in 2015, up from $225,000 in 2014. In 2015, the region’s worker productivity was 1.7 times the US average.

In 2016, 54 percent of Silicon Valley’s eighth grade students met or exceeded the state standards for mathematics proficiency, compared to 49 percent in 2015.

Silicon Valley created nearly 46,000 new jobs and had five megadeals in 2016 (more than $100 million each).

According to the figures released by the American Enterprise Institute (AEI), the combined income of San Jose, Santa Clara and Sunnyvale in Silicon Valley totaled at $235 billion. This is greater than the GDP of Finland, Portugal and Greece.

Total venture capital investment to Silicon Valley (including San Francisco) was $23.1 billion in 2016. The funding was heavily concentrated in internet and mobile products and services.

According to the 2017 Global Startup Ecosystem Report, Silicon Valley ranks first among startup ecosystems around the world.

There are still a lot of statistical data and interesting facts about Silicon Valley, but there is no need to dig deeper as the conclusion is quite clear: highly-skilled immigrants are a significant, if not a critical, asset for maintaining the US’ competitiveness in the global economy. This is what the Americans themselves say.

Why not to repeat the Silicon Valley’s success in a small way here in Azerbaijan?

We can do no more than we can, but we should try to become the Caspian region’s leader in innovations and new technologies. Among other things, this may give a strong incentive to many Azerbaijani teens, who are thirsty for knowledge and bent for entrepreneurship.

Talented people worldwide still come to Silicon Valley, but the rising housing prices, longer commute times, and growing opportunities in other innovation regions are drawing more residents away. It seems with the recently tightened immigration and visa policies in the United States it is now good time for Azerbaijan to try to recruit young talents from around the world.

For this the Azerbaijani government may initiate some changes in the immigration law in order to streamline the visa getting procedure for foreign citizens who have extraordinary skills in IT, science, engineering and math. If a candidate meets the eligibility criteria, he can be invited to work in Azerbaijan for a long term with a simplified process of entry and accommodation by analogy with US O-1 and H-1B visa types.

If we manage to launch the process of establishment of a regional hi-tech cluster with the involvement of foreign-born technical talents, it will tow a long train of the follow-up products and services, which will also be quite beneficial for the national economy.

In the end, we may become eyewitnesses to the next boom in Azerbaijan, but this time, it will not be the oil boom, but the knowledge-based one.