Azerbaijan is a developed industrial and agrarian country. The emphasis on heavy industry has considerably expanded two traditional industries-petroleum and natural gas-but engineering, light industry, and food production are also of growing importance.
In the early 1990s Azerbaijan began a transition to a market economy. Prices of most goods were liberalized, and some state-owned enterprises were privatized. Land privatization, however, proceeded slowly.
At the beginning of the 20th century Azerbaijan was the world's leading petroleum producer, and it was also the birthplace of the oil-refining industry. In 1901, for example, Azerbaijan produced 11.4 million tons of oil, more than the United States; it accounted for more than half of world production. As the 20th century progressed, however, Azerbaijan's role in oil production decreased as the industry developed in other regions of the USSR. and elsewhere in the world.
During the 1990s exploitation of the vast oil fields under the Caspian Sea was complicated by political instability in Azerbaijan, ethnic conflict throughout the region, Russian claims on the Caspian fields, and disputes over the location of new pipelines.
Azerbaijan has other natural resources, including natural gas, iodobromide waters, lead, zinc, iron, and copper ores, nepheline syenites utilized in the production of aluminum, common salt, and a great variety of building materials, including marl, limestone, and marble.
Azerbaijan's agriculture developed considerably in the latter part of the 20th century. Almost half of the country's total area is suitable for agriculture, and some two-fifths of this is under cultivation.
Grain is the leading agricultural product, with raw cotton the second most valuable crop. Favourable conditions for grapes have contributed to the development of viticulture. Most of the grape varieties grown in Azerbaijan are used for making wine, almost all of which is exported. Other crops include vegetables (particularly early varieties), fruits, walnuts, and hazelnuts. Some districts, particularly those around the cities of Saki, Zaqatala, and Goycay, are-as they have been traditionally-engaged in silkworm breeding.
High commodity output is not characteristic of Azerbaijan's animal husbandry.
Azerbaijani fisheries are of particular importance because of the sturgeon of the Caspian Sea; sturgeon roe is made into internationally renowned caviar. Sturgeon stocks are being depleted, however, as a result of pollution of Caspian waters.
Azerbaijan has a diversified industrial base, with the leading branches of heavy industry-power, manufacturing, and chemical production-predominating. Branches of the processing industry, producing mineral fertilizers, gasoline, kerosene, herbicides, industrial oils, synthetic rubber, and plastics, have developed, and Sumqayt has emerged as the major centre of this industry, as well as of ferrous metallurgy.
The country's manufacturing industries have grown considerably in the late 20th century. Azerbaijan manufactures equipment for the oil and gas industry, electrical equipment of all kinds, and many appliances and instruments. This type of industry is located mostly in Baku, Ganca, and Mingacevir.
Light industrial manufactures include cotton and woolen textiles, knitwear, traditional household items and souvenirs, footwear, and other consumer goods. Saki, Xankandi, Ganca, Mingacevir, and Baku are the main centres of this industry. Food-processing plants are distributed fairly evenly throughout the republic.
The development of Azerbaijan's industry created a demand for fuel and power supplies. All electricity is produced at thermoelectric power stations burning fossil fuels, which have been built throughout the country.
Azerbaijan exports chemicals, machinery, food (particularly grapes and other fruits and vegetables), beverages, petroleum and natural gas, iron and steel, nonferrous metals, and other products; its imports include iron and steel, machinery, and food and beverages, particularly meat and milk. Azerbaijan's primary trading partners are Russia, Turkey, Iran, and Ukraine; the country also has trade links with Georgia, Belarus, Britain, and the Central Asian republics. Azerbaijan has no trade with Armenia because of the conflict over Nagorno-Karabakh.
Few of the rivers of Azerbaijan are navigable, and most freight-including that transported out of the country-is carried by rail and truck. Considerable portions of the rail network are electrified. The principal goods carried are oil products, building materials, timber, and grain. A major railway line traverses the Kura valley and connects Baku with Tbilisi and Batumi in Georgia. Another parallels the Caspian Sea north of Baku.
Motor transport is used extensively for both freight and passengers. Roads connect various parts of the country and are often the only means of land communication between remote mountain districts and the administrative centres and large cities.
Baku, on the Caspian, is a busy seaport, handling such goods as oil, timber, grain, and cotton. The ferry link between Baku and Turkmenbashy (also on the Caspian, in Turkmenistan) augments considerably the amount of cargo passing through Azerbaijan. Air routes connect Baku with many European and Asian cities.
The Apsheron region includes the Apsheron Peninsula and several other areas of eastern Azerbaijan. As a result of its advantageous geographic position, it is crossed by freight routes connecting Azerbaijan and the whole of Transcaucasia with the North Caucasus and Central Asia. Highways run from the peninsula to every corner of the republic.
Although it is on the shores of the Caspian Sea, the Apsheron region nevertheless remains one of the most arid parts of Azerbaijan. Its main natural wealth is mineral, including oil, natural gas, iodobromide waters, and limestone used in building and cement production. Baku owes its modern growth to the development of the oil industry; oil derricks encircle the city, and the oil refineries and processing plants attract workers from many areas. Modern Sumqayt, 22 miles (35 kilometres) northwest of Baku, is currently a centre of the iron and steel, nonferrous metallurgical, and chemical industries, although the development of light engineering is envisaged.
A tea plantation in the Länkäran regionof southern Azerbaijan.
The Länkäran region of southern Azerbaijan is well endowed by nature; warm-climate crops, such as tea, feijoa (a fruit-bearing shrub), rice, grapes, tobacco, and citrus trees, flourish there. The region also produces spring and winter vegetables. The towns of Länkäran, Astara, and Masall are small, and local industry is mostly concerned with the processing of agricultural goods, while in the mountains the Talysh people make colourful rugs and carpets.
The Quba-Xacmaz region lies to the north of Apsheron. Its coastal lowlands specialize in grain and vegetable production, while vast orchards surround the towns of Quba and Qusar. The mountain slopes are used for grazing. Special breeds of sheep are raised; their skins are used in the local fur industry.
The Shirvan region, an industrially and agriculturally developed part of Azerbaijan, is centred on the Shirvan Plain. The Mingacevir hydroelectric station is located there. The area also has a well-developed network of roads. Industry is generally engaged in the processing of such agricultural products as cotton, grapes, and fruit. The most important vineyards lie in the vicinity of Samax, a town famed for its wines, notably Matrasa and Shemakha, which are, respectively, dry red and sweet. In Kurdamir a fragrant dessert wine is produced. The best varieties of pomegranates are grown near Goycay.
The Mugano-Salyan region, lying south of the Kura River and within the boundaries of the Mili and Mugan plains, specializes in cotton growing (under irrigation), producing about seven-tenths of the gross cotton output of Azerbaijan. Cotton-ginning plants are located in Barda, Salyan, and Ali-Bayraml, all of which, in addition tobeing on the Kura River, have the advantage of being located on railways and motor roads. A thermal power station stands near Ali-Bayraml.
The southwestern region includes Nagorno-Karabakh and the Lacin, Fuzuli, and Qubadl administrative districts. Because the average altitude is 4,900 feet, it is one of the areas in the country where broken relief impedes the development of transport, industry, and agriculture. Agricultural production is concentrated in the mountain valleys. Animal husbandry constitutes a large percentage of the gross agricultural output, the leading branches being sheep and pig raising. Grapes, tobacco, and grain are the main crops; wine-making, silk-making, and electrical engineering are the main industries.
The Ganca-Qazax region is situated in the centre of Transcaucasia near the junction of Azerbaijan, Armenia, and Georgia. The region has conditions favourable both for human life and for intensive agriculture. Trade routes have crossed this part of Azerbaijan from time immemorial, and the ancient town of Ganja (Ganca) was founded here. It is an industrial centre, with food, engineering, chemical, and nonferrous metallurgical industries. Naftalan is a health resort.
The Saki-Zaqatala region includes the towns of ‹aki, Zaqatala, and Balakan. Its territory borders the Greater Caucasus range, which shelters it from cold northern winds. The numerous mountain rivers provide ample supplies of water, and the region is densely populated. Agricultural products include tobacco, aromatic plants (mint, basil, and roses), rice, corn (maize), and various fruits. The area is also a major producer of hazelnuts and walnuts.
The Nakhichevan region is a typical semidesert, although irrigation has made it possible to cultivate grapes, cotton, and grain. There are several sources of mineral water in the foothill areas.
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