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Geography, agriculture and the economy Geography
Azerbaijan covers an area of 86,600 km2 and borders on the Russian Federation and Georgia to the north, Iran to the south, Armenia to the west and the Caspian Sea to the east. The Nakhchivan Autonomous Republic is an enclave that belongs to Azerbaijan but is separated from the rest of the country’s territory by Armenia, and it borders on Turkey to the west.
Azerbaijan is a mountainous country. About 43 per cent of the territory lies at an altitude of more than 1,000 m, and some parts of it are heavily forested. To the north of the country lie the greater Caucasus Mountains, which are separated from the southern Caucasus range by the valley of the Kura River.
The population numbers about 8.4 million (2006), and is growing at a rate of 1 per cent annually. Out-migration and a drop in the birth rate since the early 1990s have contributed to the recent decline in population growth.
Azerbaijan became independent in 1991. The collapse of the former Soviet Union led to Azerbaijan’s economic disintegration, a severe breakdown in social services, civil unrest and a war with neighbouring Armenia over the Nagorno-Karabakh region. The conflict displaced almost 1 million people. In 1995 a new government came to power and has pursued a course of stability and economic reform.
Agriculture
Because of wide variations in climate, elevation and rainfall, Azerbaijan has a highly diversified agricultural sector. Major crops include wheat, barley, cotton, tobacco, vegetables, grapes and other fruit. Livestock production is an important economic activity in both irrigated and mountain areas.
Agricultural land, including cropland, pasture land and rangeland, covers about 4.2 million ha, which is 49 per cent of the total land area. Overall rainfall is low and more than three quarters of the 1.5 million ha of cultivated land is under irrigation. But irrigation and drainage systems installed during the Soviet period have become inefficient because of poor maintenance.
Growth in the agricultural sector improved after the Soviet collapse. From 1997 to 2001 agriculture accounted for about 20 per cent of gross domestic product (GDP), and was second in importance to the oil sector. This is largely a result of the land reforms introduced since independence. Most of the Soviet state farms and collectives have been disbanded, and a total of 1.3 million ha of arable land has been distributed to some 850,000 rural households. Small-scale farmers on privatized, individual plots of up to 3 ha now produce more than 90 per cent of the country's agricultural output. The government continues to own most of the pasture land. Farmers obtain rights to graze from local municipalities.
Agricultural growth since 2001 has faltered. Yields are low compared to world standards and fall far short of the country's potential output. Poor performance is partly due to the legacy of the Soviet period, including irrigation and drainage systems that have deteriorated, and technologies and machinery that are outdated. Farmers are also desperately short of inputs and equipment, and they lack access to rural credit and to markets.
Economy
The collapse of the Soviet system and the painful transition to a market-based economy led to a severe economic decline in Azerbaijan. As the old centralized production and marketing system was dismantled, the country's productive capacity fell by about 70 per cent, as inflation and food deficits rose. Since 1995 the political situation has become stable and the government has launched a series of reforms to foster macroeconomic stability and renew economic growth. The economy has benefited from progressive liberalization and an increase in oil production. All in all, economic indicators have improved considerably in the last decade. The budget deficit and inflation have shrunk, and privatization of small and medium enterprises is complete. The contribution of the private sector to GDP has risen to 70 per cent. The opening up of the oil and gas industry to foreign collaboration and investment has helped build economic stability and GDP growth. Oil is now Azerbaijan's major export. Source: IFAD |
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