In terms of industrial development, the Republic of Azerbaijan is considered to be one of the most prospective countries among the newly independent states of Eurasia. The existence of natural resources and its favorable geographical location were the historic prerequisites in creating a base for the Republic's social and economic complex in the past centuries. By the 19th century oil as the main wealth of Azerbaijan, and industries associated with oil had definitively determined the specifics of Azerbaijan industry and set priorities for many decades.

Today, like a hundred years ago, the oil and gas industries are the main branches of the Republic's economy which promotes the development of other spheres and branches. It should be taken into consideration that the technology of oil and gas production, both onshore and offshore, is being rapidly updated and improved on the basis of the latest achievements in metallurgical, chemical, electronic and other industries and with a focus on technical and ecological safety standards. The Republic's fuel and energy complex is one of the oldest in the world, and it is natural that during its long history there were periods of both boom and stagnation. In the late 19th and early 20th centuries about half of the worlds oil was produced in Azeri oil fields. In 1920, after the forced reannexation to Bolshevik Russia, Azerbaijan's industry was paralyzed, and this situation immediately influenced the level of oil production. The Soviet Government, realizing the significance of achieving stabilization in this sector of the economy, placed great emphasis on its technical modernization. By the end of the 1930's about 25 million barrels of oil were being produced from Azeri oil fields. The technology, then being state of the art, allowed the exploitation of new oil fields, as well as the development of offshore oil production projects. After the end of World War II a new wave started in the Soviet Union to revive the fuel energy complex, which resulted in active subsidization of the scientific-production sector and development of the oil industry. The so called 'Azerbaijan region', where the general tactics and strategy of the Soviet oil and gas production were tested, remained the major base of the oil industry's scientific potential. In the history of the Azerbaijan oil industry the period of the 1960's and 1970's became the years of intensive production. At that time, the Republic not only fully provided itself with oil and oil products but also supplied the majority of oil and oil products to other Republics of the Soviet Union.

Since the 1980's with extensive trends in the social and economic spheres of the Soviet Union and the increase in production and export of raw materials, the oil and gas industry of Azerbaijan once again failed to keep up with the rapid technical and technological leap in the world's leading companies and corporations, which having overcome the energy crisis of the 1970's, initiated competition between the West and the East in this crucial branch of industry.

Oil production in Azerbaijan is characterized by two contradictory features. On the one hand, old onshore and offshore oil fields are in a condition of progressive exhaustion. Moreover, their infrastructure is outdated and decayed. On the other hand, big new offshore oilfields, which have the biggest potential in the world, can be developed only with the use of up-to-date technology of offshore oil production. This contradiction makes the simultaneous restructuring of production at the existing oilfields and the effective development of new ones necessary.

The majority of Azeri oil prod

In comparison with 1987, the number of cattle decreased (swine - by 32%; neat cattle - by 9.2%; other cattle - about 4.5%) parallel to the decrease of meat production (beef - by 27%; pork - by 50%; chicken - by 17%; eggs - by 9%; and milk - by 11%). As a result of a range of factors, fishery (a branch, which is relatively capital-consuming and highly mechanized) has sharply reduced. The production is organized at more than 800 state farms (sovkhozes) situated on 440000 hectares and more than 1100 cooperative farms (kolkhoz) occupying an area of about 924000 hectares. At present, private farms (approximately 500 farms with a total area of about 11400 hectares) are in progress.About 70% of the output is produced in irrigated fields, 93% of districts have irrigation systems, though they have not been fully used for the last 3-4 years. Approximately 1.4 million hectares are in the zone of farming irrigated by surface irrigation systems. Underground waters are used for drip irrigation on an area of about 65000 hectares, of which about 40000 hectares are operative.

In 1995, the decline in production continued in the majority of industries. As a result of it, in comparison with 1994 the amount of production (aggregate output) decreased by 21.4%. The situation in some industries is as follows: in machinery-building the decline reached 46%; metallurgical industry - 15%; timber and wood industry - 77%; construction industry - 63%; and food industry - 44%.

The decline in the fuel and energy industries is of more moderate character (3-4%). Also, there is some disproportion in the level of decline between the production and processing industries, which has resulted in structural changes in production. For example, in 1995, the share of fuel and energy industry in the total volume of industrial production constituted 49%, while in 1994 it was 33%. For the same period the share of the metallurgical industry fell from 2% to 1%; machinery-building industry - from 11.5% to 9.8%; and food industry - from 11.6% to 6.8%. Despite a sharp decline in output, 12% of the products were not sold. In 1995, the index of wholesale prices for industrial products increased by 18.7 times, including those for industrial-technical products - by 19.7 times and consumer products by 15.9 times.

In 1995, the total population of the Republic was 7.5 million, of which 2.6 million people (about 35%) were engaged in production. 1.8 million people out of the employed (or 71%) are engaged in the public sector. The unemployed population makes up 1.1 million. According to the data of employment services, by the end of 1995, 66 thousand people were registered as unemployed, of which only 12% received unemployment benefits, and for that period an additional 10 thousand employees were needed in enterprises.

In 1995, the stabilization of the national currency (manat) exchange rate, and the lowering of the rate of inflation led to a considerable reduction in gaps between consumer prices increase and average wages. The population's income increased 4.3 times, while expenditures increased 5 times. At the same time, wages, pensions, etc. remain extremely low. The minimum wage is 5,500 Manats (approximately 1.2 U.S. Dollars, the average wage is 57,500 Manats or 13 U.S. Dollars per month. By the end of 1995 the average wage constituted 71,000 Manats or 16 U.S. Dollars. The minimum wage is 22 times lower than the living wage, and the average wage is 5 times lower than the minimum consumer budget. According to estimations, an average monthly income of about 6% of the population is at the level of the minimum wage, incomes of about 65% of the population are be