21-7050
telephone: (9412) 98-03-35, 36, 37
FAX: (9412) 90-66-71

Flag description: three equal horizontal bands of blue (top), red, and
green; a crescent and eight-pointed star in white are centered in red
band

@Azerbaijan:Economy

Economy - overview: Azerbaijan is less developed industrially than
either Armenia or Georgia, the other Caucasian states. It resembles
the Central Asian states in its majority Muslim population, high
structural unemployment, and low standard of living. The economy's
most prominent products are oil, cotton, and natural gas. Production
from the Caspian oil field declined through 1997 but registered an
increase in 1998-99. Negotiation of 19 production-sharing arrangements
(PSAs) with foreign firms, which have thus far committed $60 billion
to oil field development, should generate the funds needed to spur
future industrial development. Oil production under the first of these
PSAs, with the Azerbaijan International Operating Company, began in
November 1997. Azerbaijan shares all the formidable problems of the
former Soviet republics in making the transition from a command to a
market economy, but its considerable energy resources brighten its
long-term prospects. Baku has only recently begun making progress on
economic reform, and old economic ties and structures are slowly being
replaced. An obstacle to economic progress, including stepped up
foreign investment, is the continuing conflict with Armenia over the
Nagorno-Karabakh region. Trade with Russia and the other former Soviet
republics is declining in importance while trade is building up with
Turkey, Iran, UAE, and the nations of Europe. Growth in 2000 should
match growth in 1999. Long-term prospects will depend on world oil
prices and the location of new pipelines in the region.

GDP: purchasing power parity - $14 billion (1999 est.)

GDP - real growth rate: 7% (1999 est.)

GDP - per capita: purchasing power parity - $1,770 (1999 est.)

GDP - composition by sector:
agriculture: 22%
industry: 18%
services: 60% (1997 est.)

Population below poverty line: 60% (1999 est.)

Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA%

Inflation rate (consumer prices): -6.8% (1999 est.)

Labor force: 2.9 million (1997)

Labor force - by occupation: agriculture and forestry 32%, industry
and construction 15%, services 53% (1997)

Unemployment rate: 20% (1999 est.)

Budget:
revenues: $565 million