Manufacturing: The oil equipment and related machine-building sectors constitute the most promising manufacturing sectors. Since Azerbaijan’s independence, there has been a shift in manufacturing from oil-based industries, such as chemicals, to sectors such as finished metal goods, including pipes, machine tools and computers. Petrochemical products, including synthetics, rubber, detergents and polymeric materials, as well as aluminum smelting, textiles and clothing, and food and beverages, comprise the bulk of other manufacturing operations. The government has designated the industrial zone of Sumgayit, country’s third large city, as a free economic zone in an effort to attract foreign investors to produce goods for export.

Agriculture: Agriculture has always been the important part of Azerbaijan economy. More than 30 percent of Azerbaijan’s workforce is engaged in some form of agriculture. Most of the country’s farming activity is centered in the fertile lowlands of central Azerbaijan, along the Kura and Araz rivers. Territory of Azerbaijan is divided into 59 agricultural regions extending across 10 geographic zones.

Crops, including cotton and grapes, and livestock are evenly spread across these regions, while tobacco production is concentrated in specific regions. Crops constitute over two-third of agricultural production, while livestock accounts for the rest. Major cash crops in Azerbaijan are grapes, cotton and tobacco, which have traditionally been produced and marketed by the state.

After the collapse of the Soviet Union the deregulation and liberalization took place in the economy, which led to the rapid changes in the agricultural sector as well. After the 1996 Law on Land Reforms land has been distributed to individuals. Former state-owned farms have been granted operational autonomy, which has greatly increased their productivity. Private farming, especially in the areas of vegetable, fruit and livestock production, is gradually gaining strength.

Mining: Azerbaijan is endowed with iron, gold, aluminum, zinc, copper, marble and fire clay. In particular, the country has large reserves of iron ore and aluminum ore. Foreign investment is needed to develop and modernize existing mining operations.

Infrastructure: There are 2,089 km of railways, which provide the main source of transportation for freight. The network of roads for vehicles serves domestic cargo traffic and provides access to international highways. Sea cargo transportation is very important for Azerbaijan, connecting the country with other states of Central Asia, Iran and Russia. Baku is the largest port on the Caspian Sea for cargo-handling facilities and for ferry lines connecting Europe and Asia. Azerbaijan maintains regular flights with Commonwealth of Independent States (CIS) countries, as well as with Germany, Israel, Iran, Turkey, Austria, Pakistan, the Netherlands, Greece, Poland, China, Italy, the United Kingdom and the United Arab Emirates. Azerbaijan Airlines (AZAL), British Airways, Lufthansa, Austrian Airlines, Turkish Airlines, Aeroflot and other regional carriers maintain air service. The country’s telecommunications infrastructure is in the process of being rebuilt and modernized, but additional investments are needed for the future.

Banking

Banking system of Azerbaijan Republic includes the National Bank and credit organizations. The regulation of the banking activity is conducted by the Constitution of the Azerbaijan Republic, present Law, the Law "About National Bank of the Azerbaijan Republic", other legislative and normative acts of the National Bank of Azerbaijan (NBA). National bank was created in February 1992 on the base of Azerbaijan State Bank (former affiliate of Soviet State Bank). NBA serves as Azerbaijan’s central bank and in that capacity manages the monetary affairs of the state as well as supervising all commercial banks. National Bank is the regulatory agency responsible for government capitalization and liquidity policy. Commercial banking sector is represented by two state-owned banks, International Bank of Azerbaijan (51% of shares owned by the state) and United Universal Joint-Stock Bank (created as a result of merger of Savings Bank, Industrial Bank and Agriculture Bank, 100% shares owned by the state), and large number of private commercial banks. In 2001 the restructuring of state banks was completed and significant steps have been taken toward privatization of state-owned International Bank and United Universal Joint-Stock Bank. As a result of reforms in banking sector new electronic payment system was introduced and accounting and banking supervision was brought to international standards level.

Trade and Foreign Investment

Since re-establishing its independence, Azerbaijan has swiftly reoriented itself towards new markets outside of the former Soviet Union.

Major export markets include Iran, Russia, Georgia and Turkey. Major import markets are EU, Turkey, the United Arab Emirates, the Ukraine and Germany. Major Export Products - Oil and oil products, food products, machinery and equipment, textiles, chemicals, metals and plastics

Major Import Products - Machinery and equipment, transport facilities, mineral products, metal, chemicals, plastics, food products

Environment

Azerbaijan is the largest country in South Caucasus. Almost 50 percent of the total area is agricultural land, 2.5 percent is urban land (with Baku comprising 2.15 percent) and 13 percent is forest territory. Lowlands occupy more than half of the country. Azerbaijan is notable for its ecological diversity. Its territory includes vast plains below sea level, mountain peaks with heights of over 4,000 meters, deserts, Alpine meadows, salt marshes and sub-tropical woods. The country has nine of the twelve climate zones.

Azerbaijan accounts for 15 percent of all water resources in the South Caucasus countries. All of the country’s rivers flow into the Caspian Sea. The irrigation system is regulated by water reservoirs. The Caspian Sea fishing stock is capable of producing six times more fish than the Black Sea, however, water pollution is a growing concern that must still be addressed.

Azerbaijan is notable for its diversity of species, both flora and fauna. Of the 4,500 plant species, 143 are considered endangered. Of the 20,000 fauna species, 109 types of animals are endangered. More than 2,100 century-old trees are protected by the state.

The State Committee for Ecology and the Use of Natural Resources, which reports directly to the President, has responsibility for developing and managing environmental protection programs. The Committee has made important progress by introducing a number of important laws and regulations to safeguard Azerbaijan’s natural resources.