Ambassador Richard D. KAUZLARICH
embassy: Azadliq Prospekti 83, Baku
mailing address : use embassy street address
telephone: [9] (9412) 96-03-35
FAX: [9] (9412) 96-04-69

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

Economy

Economy - overview: Azerbaijan is less developed industrially than
either Armenia or Georgia, the other Transcaucasian states. It
resembles the Central Asian states in its majority nominally Muslim
population, high structural unemployment, and low standard of living.
The economy's most prominent products are oil, cotton, and gas.
Production from the Caspian oil and gas field has been in decline for
several years, but the November 1994 ratification of the $7.5 billion
oil deal with a consortium of Western companies should generate the
funds needed to spur future industrial development. Azerbaijan shares
all the formidable problems of the ex-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. A major short-term
obstacle to economic progress, including stepped up foreign
investment, is the continuing conflict with Armenia over the ethnic
Armenian-dominated region of Nagorno-Karabakh. Trade with Russia and
the other former Soviet republics is declining in importance while
trade is building up with the nations of Europe, Turkey, Iran and the
UAE.

GDP: purchasing power parity - $11.9 billion (1996 estimate as
extrapolated from World Bank estimate for 1994)

GDP - real growth rate: 1.2% (1996 est.)

GDP - per capita: purchasing power parity - $1,550 (1996 est.)

GDP - composition by sector:
agriculture: 26%
industry : 30%
services: 44% (1995 est.)

Inflation rate - consumer price index: 20% (1996 est.)

Labor force:
total: 2.789 million
by occupation: agriculture and forestry 32%, industry and construction
26%, other 42% (1990)

Unemployment rate: 1.1% includes officially registered unemployed;
also large numbers of unregistered unemployed and underemployed
workers (December 1996)

Budget:
revenues: $565 million
expenditures: $682 million, including capital expenditures of $NA
(1996 est.)

Industries: petroleum and natural gas, petroleum products, oilfield