The Role of Digital Governance in Economic Development: The Case of the Nakhchivan Autonomous Republic

Abstract

Digital governance has become a central instrument of economic modernisation, enabling states and subnational regions to enhance administrative efficiency, reduce corruption, attract investment, and integrate into the global knowledge economy. This article examines the role of digital governance in the economic development of the Nakhchivan Autonomous Republic, an exclave of the Republic of Azerbaijan whose geographic isolation and distinctive economic conditions make digital transformation particularly consequential. Drawing on the international literature on e-government and economic growth, the experience of Azerbaijan's nationally recognised digital governance reforms — including the ASAN service model and the e-government portal — and the specific developmental context of Nakhchivan, the study analyses the mechanisms through which digital governance contributes to economic development: the reduction of transaction costs, the improvement of transparency and accountability, the facilitation of entrepreneurship and small-business formation, and the support of economic diversification beyond traditional sectors. The article argues that for a geographically constrained region such as Nakhchivan, digital governance offers a uniquely valuable pathway to overcome the limitations of physical isolation by reducing the friction of administrative processes, broadening access to public services, and connecting local economic actors to national and international markets. The study concludes with policy recommendations for strengthening digital governance capacity in Nakhchivan and identifies directions for future empirical research.