BAKU, Azerbaijan, August 4. Rising trade across the Caspian Sea strengthens Georgia’s role as a logistics hub.
This was reported in an article published on the website of the Asian Development Bank (ADB).
According to the article, Georgia stands at an important turning point.
The publication noted that after a decade of robust growth driven by trade openness and investment and underpinned by its strategic location between Asia and Europe, the country needs more diversified and higher value activity that can withstand regional shocks and tighter environmental standards.
"One pathway is to rethink industrial development through comprehensive special economic zones (CSEZs) built on circular economy principles—systems that eliminate waste by reusing, repairing, and recycling materials instead of the traditional “take–make–dispose” model. These zones can help Georgia upgrade its industrial base, attract green investment, and strengthen its role in regional and global value chains.
Georgia’s location along the Trans Caspian International Transport Route—the “Middle Corridor” linking East and Central Asia to Europe—has taken on new importance as companies diversify supply chains. Rising trade across the Caspian Sea strengthens Georgia’s role as a logistics hub and creates opportunities in warehousing and processing. Yet the industrial sector remains modest, and exports are still dominated by lower value products such as vehicle spare parts, metals, and minerals. The challenge is to turn transit flows into homegrown, higher value production and services rather than mainly moving other countries’ goods," the bank's report said.
The article emphasized that Georgia’s existing free industrial zones have not yet delivered this transformation.
"While they offer fiscal incentives and easier regulations, many operate as isolated enclaves with weak links to local suppliers and skills and knowledge networks. Infrastructure gaps in transport, power, water, and digital connectivity, together with skills shortages and limited capacity among domestic firms, constrain their ability to host complex value chains and generate spillovers. A model relying on privately run parks competing for mobile—rather than committed and long-term—investment has struggled to align with national development and innovation goals.
Comprehensive special economic zones offer a more integrated alternative. Instead of standalone industrial parks, CSEZs bring together manufacturing, logistics, services, research, and residential areas in a single planned ecosystem. This can create economies of scale, stronger links between sectors, and a more predictable environment for investors. When such zones are embedded in wider industrial and skills strategies, they can support export diversification, technology upgrading, and the growth of domestic supplier networks.
For Georgia, a CSEZ model is a practical way to connect its current economic structure with its ambitions for higher productivity and a stronger role as a regional transport and logistics hub," the ADB reported.
According to the bank, the next phase in Georgia’s development will require a shift from incremental adjustments toward a more integrated, sustainable growth model.
"Integrating circular economy principles into this new generation of zones is both strategic and pragmatic: Georgia’s circularity rate—the share of recovered materials reused in the economy—is low compared with European benchmarks, leaving substantial room to reduce waste and improve resource efficiency. At the same time, the country faces stricter environmental standards, including waste reduction and producer responsibility.
Embedding circular practices in CSEZs from the outset would allow infrastructure, regulations, and business services to be designed around efficient resource use rather than retrofitted later at higher cost, while helping Georgia align with EU and international practice, attract sustainability minded investors, and lower long term resource bills. Eco industrial parks in Denmark, the People’s Republic of China, and the Republic of Korea show how industrial symbiosis—where companies reuse each other’s by products, heat, water, and materials—can cut environmental impacts while improving competitiveness," the bank reported.
The publication highlighted that Georgia already has a foundation fur such devdlopment: free industrial zones and logistics assets in Tbilisi, Kutaisi, and Poti.
"Tbilisi could focus on green logistics, business services, and digital platforms boosting resource efficiency and connectivity. Kutaisi could become a hub for circular manufacturing while integrating renewable energy and research capacity. Poti, anchored by its port, could specialize in recycling, resource recovery, and circular logistics linked to maritime trade.
"Rather than developing these sites separately, a national framework could connect them, set common standards, and create synergies. Several sectors offer strong potential for circular transformation within such zones. Construction can reduce waste and emissions by recycling materials and using more sustainable inputs. Energy and infrastructure investments can be planned around efficiency gains and renewables. Battery recycling and electric mobility are emerging opportunities as transport systems modernize.
Turning this vision into practice will require coordinated policies and targeted investment. A legal and institutional framework for CSEZs is needed to define responsibilities, incentives, and accountability. Feasibility work should assess market demand, infrastructure needs, and environmental risks across proposed sites and guide strategic investments in transport links, energy, water, and digital systems," the ADB's report announced.
The bank pointed out that the next phase in Georgia’s development will require a shift from incremental adjustments toward a more integrated and sustainable growth model.
"Circular-economy CSEZs offer a realistic pathway: by linking industrial development with sustainability and regional connectivity, they can help Georgia unlock new sources of growth and strengthen its position in the global economy," the publication explained.
The article emphasized that as trade routes shift and sustainability becomes central to investment decisions, the question is less whether Georgia should pursue this model, than how quickly it can do so.
