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Azerbaijan: Economic Dislocations
Country Study > Chapter 6 > The Economy > Economic Dislocations


The general economic dislocations within the Soviet Union in the late Gorbachev period hurt Azerbaijan by weakening interrepublic trade links. After the breakup of the Soviet Union, trade links among the former republics weakened further. Azerbaijani enterprises responded by establishing many new trade ties on an ad hoc basis. Although some moves were made toward a market economy, state ownership of the means of production and state direction of the economy still dominated in early 1994.

Despite the economic turmoil caused in 1992 and 1993 by the demise of the Soviet Union and the conflict in Nagorno-Karabakh, the Azerbaijani economy remained in better condition than those of its neighbors Armenia and Georgia and some of the Central Asian states. According to estimates by Western economists, gross industrial production plunged at least 26 percent in 1992 and 10 percent in 1993.

In 1992 poor weather contributed to a decline in production of important cash crops. Crude oil and refinery production continued a recent downward spiral, reflecting a lack of infrastructure maintenance and other inputs. Inflation took off in early 1992, when many prices were decontrolled, and accelerated throughout the year, reaching an annual rate of 735 percent by October. Inflation for 1993 was estimated at 1,200 percent, a figure exceeded only by rates for Russia and a few other CIS states. Officials tried unsuccessfully to protect the standard of living from inflation by periodically increasing wage payments and taking other measures. In his New Year's message in January 1994, Aliyev acknowledged that during 1993 Azerbaijan had faced a serious economic crisis that led to further declines in the standard of living, but he promised that 1994 would witness positive changes.

Data as of March 1994

Last Updated: March 1994

Editor's Note: Country Studies included here were published between 1988 and 1998. The Country study for Azerbaijan was first published in 1995. Where available, the data has been updated through 2008. The date at the bottom of each section will indicate the time period of the data. Information on some countries may no longer be up to date. See the "Research Completed" date at the beginning of each study on the Title Page or the "Data as of" date at the end of each section of text. This information is included due to its comprehensiveness and for historical purposes.

Note that current information from the CIA World Factbook, U.S. Department of State Background Notes, Australia's Department of Foreign Affairs and Trade Country Briefs, the UK's Foreign and Commonwealth Office's Country Profiles, and the World Bank can be found on

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