Caucasus and Central Asia emerge as investment frontier

That may be changing.

For years, the Caucasus and Central Asia sat on the margins of global investment conversations. As trade routes shift, geopolitical tensions rise and economic uncertainty spreads, the region is drawing new attention from international markets looking for alternatives to traditional corridors. The conversation took center stage at the Investment Outlook Forum, part of the Islamic Development Bank (IsDB) Group Annual Meetings in Azerbaijan. Policymakers, development finance institutions and business leaders gathered for deal-making and panels focused on how the region can attract long-term capital.

All 57 member countries came together, displaying what officials described as a shared determination to strengthen regional cohesion. Much of the discussion centered on the country and its neighbors — and whether they can unlock new sources of growth.

Regional cooperation takes center stage

Dr. Khalid Khalafalla, CEO of the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), said the exchange of ideas at the forum needed to translate into practical solutions. He pointed to global uncertainty as a reason for member countries to work together.

“Now, with the global uncertainty — definitely this is timely for our member countries to come together,” Khalafalla said. He added that financial integration and liquidity mobilization could serve development goals across the bloc.

Karim said: “Regional connectivity can contribute to development in the region.”

Ismail Ersahin, CEO of the World Association of Investment Promotion Agencies (WAIPA), noted that willingness to collaborate stood out amid ongoing conflicts elsewhere. “In all the regions that are ongoing conflicts, it is not the best time for the investments to flow from one point to the other,” he said. “But here people are together and showing solidarity, and they are collaborating.”

Muhammad Humair Karim, Secretary at the Ministry of Economic Affairs, Pakistan, stressed that development requires collective responsibility. He said that progress cannot be achieved by just one stakeholder or one country.

Deals, infrastructure and clean energy on the agenda

The event looked at capital deployment, capital trends and opportunities across the nation, the South Caucasus, Central Asia and the Middle East. Discussions covered cross-border capital, industrial development, infrastructure, renewable energy and how development finance can mobilize private capital.

The country worked to position itself at the center of these conversations. Ulvi Mansurov, Chairman of the Management Board of the Azerbaijan Business Development Fund (ABDF), argued that attracting capital requires more than capital. He highlighted business support mechanisms and a strong environment for scaling enterprises.

But countries still compete hard for international capital.

“This is not only about discussions of economic integration or growth, but this is also exchange of experience, exchange of knowledge,” Mansurov said. He noted that having so many countries with different practices and attitudes toward business and governance was valuable.

Its abundant natural resources, growing population and expanding markets offer obvious draws. Reforms, regulatory frameworks and financing mechanisms were identified as areas needing improvement to ease investor concerns and boost confidence.

Azerbaijan’s bet on the Middle Corridor

Located at the crossroads of Europe and Asia, the nation has invested heavily in transport infrastructure, logistics corridors and energy connectivity. Policymakers argue that its position along the Middle Corridor — linking China and Central Asia with Europe through the South Caucasus — offers a strategic advantage as businesses seek alternative trade routes.

Development finance institutions examined how blended finance, sovereign partnerships and public-private cooperation could unlock funding in sectors from infrastructure and manufacturing to technology and clean energy. Renewable energy was a recurring theme, especially after COP29 and its ambitions to increase solar and wind generation.

Delegates explored opportunities tied to energy exports and green financing mechanisms.

For critics, the question is whether regional economies can move fast enough to address regulatory barriers, improve market access and create conditions that attract large-scale capital.

The opportunity isn’t in doubt.

Whether the Caucasus and Central Asia can turn strategic potential into sustainable growth — and become one of the next major destinations for global capital — remains the open question.