Transcaucasia's substantial natural resources have favoured economic development. The geologically recent rock layers around the Greater Caucasus, notably in the Kura-Araks Lowland and beneath the Caspian Sea, contain oil- and natural-gas-bearing deposits. Metallic ores are associated with magmatic rocks thrust up from deep in the crust: magnetite iron occurs near Dashkasan in Azerbaijan; copper and molybdenum are found in several parts of the Transcaucasian upland; several metallic ores lie in the Greater Caucasus; and manganese is found near Chiatura in Georgia. Building materials include the rose-coloured tuffs of Mount Aragats. The mineral-water springs of the Caucasus are widely renowned throughout the former Soviet Union. Nonferrous metals, hydrocarbons, and coal are extracted in large quantities.
Tea, citrus fruits, the oil-bearing tung tree, and bamboo are grown in the humid subtropical lowlands and foothills of Transcaucasia. Other areas produce tobacco, corn, grapes, and various fruits. Water from the numerous rivers of the Caucasus is used to irrigate the Kura-Araks Lowland and the lands around the middle Araks for the production of cotton, rice, and alfalfa (lucerne). Mulberry trees, grown along most irrigation canals, provide the basis for silkworm culture and a silk-making industry.
In the higher elevations of the Caucasus, the primary activity is livestock raising (mainly sheep and cattle), although the people there also grow some mountain crops and pursue domestic crafts.
A number of large industrial centres in Transcaucasia produce cast iron and steel, locomotives, trucks and automobiles, rubber and other chemical products, cement, hard-metal alloys, textiles and footwear, and food and tobacco products. Since the 1960s light industries, including the manufacture of electrical and electronic equipment such as televisions, computers, and microprocessors, have been established in the larger cities.
Hydroelectric power has been well developed and is intensively used. Hydroelectric stations have been built on the Kura (at Mingachevir, Azerbaijan), Khrami (a right-bank tributary of the Kura), and Rioni rivers; on several rivers of the Greater Caucasus; and on the Hrazdan River of Armenia, where the river's considerable potential has been exploited by a chain of downstream stations.
With its beautiful beaches along the coasts of the Black and Caspian seas, Transcaucasia has become a popular resort area; notable resorts include Sukhumi, Gagra, and Pitsunda in north-western Georgia. Certain regions, such as Svanetia in Georgia, are known for their architectural treasures and picturesque villages.
Transcaucasia's mineral springs and year-round mild climate make it a conducive environment for the treatment of many illnesses. Millions of people from Russia, Ukraine, and other countries travel to the region each year to rest, receive medical treatment, and enjoy such recreational activities as mountaineering and skiing.
Difficult physical conditions hindered the construction of railways in Transcaucasia. Trunk lines ring each of the main mountain ranges and traverse the Caucasian isthmus through Transcaucasia, but no railway crosses the Greater Caucasus. Branch lines from the main lines run through many of the valleys, and there are links with Tabryz and Tehran in Iran and Erzurum in Turkey.
A network of highways is heavily used for the transport of passengers and goods. On the tortuous Georgian, Sukhumi, and Ossetian military roads that traverse the Greater Caucasus, however, traffic is light; these roads are used mainly by tourists.
Oil and natural-gas pipelines also crisscross the region.
Only the lower reaches of the Kura and Rioni rivers are navigable.