Significant developments have been observed in the economic, political and social life of the Republic of Azerbaijan since the declaration of state independence. The chaotic situation emerged just after the decline of economic and political system of the Soviet Union was left far behind, the social and political stability was restored, and the economic development period was commenced.

Scope of the achievements has been considerably broadened owing to the successful continuation of economic development strategy by the President Ilham Aliyev which was set by Heydar Aliyev, the National Leader of Azerbaijan. The measures implemented according to the main dimensions of socio-economic development set by the decree of the President on "the measures for promoting the socio-economic development in the Republic of Azerbaijan" dated 24 November 2003 consolidated the achievements in this field. On the other hand, fulfillment of the development-oriented measures in all spheres of economy in the framework of separate state programs fairly raised overall efficiency. One of these programs for 2004-2008, "The State Program for the socio-economic development of the regions of the Republic of Azerbaijan" dated 11 February 2004, is of crucial importance to direct the general economic development towards different regions alongside the center. The measures regarding complete implementation of the regional investment potential, establishment of innovative industry, agriculture and service institutions, rise of employment level, improvement of education, health and other social guarantees of the people serve the economic and food security, the protection of internal market, the minimization of the dependency on import economy and several such strategic state interests.

Thus far crucial achievements have been obtained regarding the arrangement of various directions of development of the country's economy in the framework of common state programs, the speedy economic development, the increasing role of the regions on social and economic development, and the improvement of prosperity and life standards thanks to the complex development of the regions and various spheres of economy.

The economy and social life of the Nakhchivan AR is notable with its uniqueness on the mentioned development background. In the wake of the military aggression of the invader Republic of Armenia to Azerbaijani soils, the autonomous republic being imposed to exist under the blockade conditions of economic and transportation relations actively participates in large-scale constructive process in spite of current obstacles.

The territory of the Nakhchivan AR as a whole is mentioned as one of the domestic economic districts upon the economic and geographical division of the Republic of Azerbaijan into districts. It is, however, distinguished with its diversified structure. This situation is due to the location of the autonomous republic on the isolated geographical territory of the Republic of Azerbaijan and the necessity to face domestic demand via the creation of relevant industrial fields to this end.

The Nakhchivan AR is a developing diversified industrial and agrarian-industrial republic. Processing of agricultural produce and output of mineral products are of special place. There are electronics, metal processing, building materials and light industry. Agriculture mainly includes grain-grower, cattle-breeding, vegetable-growing and horticulture. The economic reforms were systematically carried out, the agrarian reform was concluded, and the great opportunities were created in order to develop free ownership, private property and small-scale business.

Significant measures have been implemented so as to attain sustainable development, to stimulate the tendency towards the entrepreneurship and to support all efforts in that regard. Purposeful programs, moreover, have been worked out in this field. "The Regional Development Program of the Nakhchivan Autonomous Republic (2005-2008)" was endorsed and have been successfully implemented by the order of the Chairman of the Supreme Assembly of Nakhchivan AR in order to fulfill the relevant decree of the President of the Republic of Azerbaijan on the "endorsement of the State Program on Social and Economic Development of the Regions of the Republic of Azerbaijan (2004-2008)", as well as to increase the production of agricultural produce utilizing natural resources and local conditions, to ensure the development of processing industry, service and other infrastructure centers, and tourism, to elevate the employment level and to improve general life conditions.

As result of pursuing import-export policy guided by scientific principles, economic push was made for the development of production-oriented ownership, for the increasing of final produce, for the supply of domestic market with local productions and for the strengthening of production potential rest upon local materials. Such a complex approach to socio-economic development, the outcomes of fundamental reforms conducted and large-scale creative processes ensure the high-rate development and further regarding the economy and social life of the autonomous republic.

On 14 April 2009, "State Program on Socio-economic Development of the Regions of the Republic of Azerbaijan in 2009-2013" has been endorsed by the President of the Republic of Azerbaijan in order to make the progress sustainable and to effectively use existing natural resources and labor potential. The implementation of decisive measures as to development of the Nakhchivan Autonomous Republic is also considered in the second State Program. The results of 2009 and dynamic growth in the socio-economic life of the autonomous republic give a guarantee for the successful implementation of this State Program as well.

As in recent periods, the macroeconomic indicators showing the activity in economic and social fields of the autonomous republic fairly elevated in 2009. In fact, GDP, as a main indicator of economic development in the Nakhchivan Autonomous Republic, became 974 million AZN in 2009 increasing by 21% as compared to 2008. During this period, the GDP per capita increased too. While it was 2057 AZN in 2008, it became 2435 AZN in 2009 growing by 18%.

The social-oriented economic development, the improvement of well-being for each individual depending upon the participation in economic and social development, the liberalization of state-regulatory mechanisms, the improvement of basic criteria of economic prosperity such as free competition, entrepreneurship and investment conditions, the overthrow of reasonless restrictions, the wide employment of methods for promotion of investments and entrepreneurship, and complex works conducted for the economic security of the autonomous republic are basis for social and economic development.

Entrepreneurship

The market-oriented development of the economy of Nakhchivan Autonomous Republic shifted the people's attitude towards the work, and made them more interested with entrepreneurship. The private sector, small- and middle-range entrepreneurship in particular, play significant role in formation of the economy in the autonomous republic.

The economic reforms lead the way for the establishment of market economy mechanisms and are aimed at the foundation of enterprises producing high-quality goods through attracting investments, modern technology and management experience, the opening of new work places and consequently the improvement of people's well-being.

The legal basis for the entrepreneurship has been reformed in line with world experience in order to provide auspicious conditions for development of entrepreneurship. Relevant laws, programs and decrees of vital importance in all fields of management and economy have been adopted. Necessary mechanisms of entrepreneurship infrastructure have been established. Structures rendering financial, information and consultation services to entrepreneurs have been formed. The first stage of privatization process forming inevitable basis for development of entrepreneurship was completed, and the Second State Program regarding privatization was adopted. Consequently, overturn of big and small enterprises into stockholder societies and their privatization entered into next crucial stage. The main task to fulfill this stage is the creation of efficient entrepreneurship.

Several decrees and orders were issued to defend the rights and legal interests of the entrepreneurs, to establish transparent link mechanism between official bodies and entrepreneurship structures, and to enhance business environment.

The most important among them are decrees of the President of the Republic of Azerbaijan dated September 28, 2002 and accordingly of the Chairman of the Supreme Assembly of Nakhchivan Autonomous Republic dated September 30, 2002, "on prevention of the interferences hindering the development of entrepreneurship". Being adopted to overthrow many factors exerting bad influence on the development of market economy, they are significant to defend the rights of entrepreneurs. The interferences of several central and local executive bodies into the enterprises were prohibited by the orders, an effective relation system were set up, and the efficient usage of "Supervision Book" was ensured through surveillance system employing to register controls in enterprises.

The social union of the entrepreneurs, the Confederation of Entrepreneurs (Employers) of Nakhchivan Autonomous Republic and the autonomous republic organization of the Trade Union Committee of Enterprise Workers were established with the aim to pursue the interests of the entrepreneurs and to coordinate their works in the Nakhchivan Autonomous Republic. In recent years, much has done to conform the tax system to the development of entrepreneurship. Consequently, the degree of profit tax and VAT, and compulsory insurance fee were decreased. Common tax measures, moreover, are valid for small-scale enterprises.

State fiscal support system to the entrepreneurs has been formed and is being developed. The state financial assistance to entrepreneurs were increased and the finance mechanisms of investment projects of the entrepreneurs with easier conditions were improved by the decree of the President of the Republic of Azerbaijan dated August 27, 2002, on "the affirmation of the Statue of National Assistance Fund of the Republic of Azerbaijan to Entrepreneurship" and accordingly the resolution of the Cabinet of Ministers of the Nakhchivan Autonomous Republic on December 03, 2002. Transparent and simple mechanisms of credit allocation are included in "the Regulations regarding the Allocations of National Assistance Fund to Entrepreneurship" affirmed by relevant decision. The measures fulfilled ensured the creation of reliable financial exchange system of the small- and middle-range entrepreneurs thanks to the state budget by means of the Assistance Fund to Entrepreneurship.

With regard to the registration of entrepreneurship "single window" system has been launched since 1 January 2008 according to the Order of the President of the Republic of Azerbaijan dated 25 October 2007 in order to stimulate the entrepreneurship activity and to overcome current obstacles. This system bears its results in short-term period, consequently in the autonomous republic 50 legal entities and 1,454 individuals were registered during 2009.

The purposeful measures are carried out with the aim to stimulate the business environment in the autonomous republic and to show the state support to this field, to render legal education for the entrepreneurs, to prevent unfair competition, to establish reciprocal economic ties with foreign businessmen, to ensure the participation of entrepreneurs in "Business Forums", conferences, international and local exhibitions and to coordinate and extend their activities with regular meetings. As result of the purposeful policies conducted by the administration of the Nakhchivan Autonomous Republic substantial goals have been reached in this field. The efforts of successful entrepreneurs have always been appraised by the state.

In addition to all of these, the auspicious conditions put by the state and the employment of new technology directly leading the pro-competitive production pave the way for crucial investment opportunities in the autonomous republic. Currently, taking into account propitious natural climate, rich reserves of raw materials and development perspectives, required investment fields are as follows:

The sugar beet processing plant with daily productive capacity of 800-1000 tons,

Cement production plant,

Iodinised salt processing plant,

The glass-ware production on the basis of "Nakhchivan Glass-Ware" Ltd. company,

The enterprise for carpet weaving on the basis of "Nakhchivan Carpet" Ltd. company,

The restoration of the "Ordubad Silk" Ltd. company,

The restoration of "Nakhchivan Knitted Wear" Ltd. company,

The construction of Water Power Stations,

The settlement of the wind electric installations on plain territory of Araz River in Ordubad and Julfa districts,

Technical medicinal herbs processing enterprise

Leather and leather ware enterprise

(More information is possible from the Confederation of Nakhchivan AR Entrepreneurs. Address: 11 Tabriz Av., Nakhchivan. Tel: (994) 136 445170)

Industry

In the Nakhchivan Autonomous Republic the great achievements are attained in the field of industry as well. The specific weight of industrial production in additional value recently emerged is increasing. The fundamental policies are pursued to stimulate the increasing of special importance of processing industry productions within industrial goods exportation, to create network of modern enterprises with high labor productivity, to reestablish current industrial enterprises, and to form new economic relations with counterpart foreign companies. Considerable advancements have been obtained owing to the intensification of privatization process in this sector and the restoration of the economically expedient industrial enterprises available for markets. The Nakhchivan AR is holding the first place amongst the 10 economic regions (rayons) of the Republic of Azerbaijan according to the industrial goods growth rate, the specific weight of non-governmental sector in general industrial production and the minimization of ready produce remnant.

In 2009, the amount of industrial production was 212 million 469 thousand AZN which is comparatively 25% more than the number of 2008. Regarding the volume of industrial produce, 80% is of production and 20% is of service. Outcome of 33 million 418 thousand AZN in public sector and 179 million 51 thousand AZN in private sector is result of the care rendering for the improvement of entrepreneurship environment and private sector. Private sector takes 84.3% of industrial produce in 2009.

The convenient business environment substantially expedites the emergence of new corporate bodies and individuals, and the growing of economic enterprises. The systematic policies fulfilled with the aim to regularly strengthen the industrial potential bear their fruits. Several important projects recently launched will soon pave the way for crucial positive changes.

Construction

The dynamic growth is observed in the volume of construction-erection works in the Nakhchivan Autonomous Republic. The territory of the autonomous republic with many rich building materials facilitates the exportation of rare building materials to the world markets and the establishment of the enterprises for building materials, iron-concrete, brick, travertine, marble and etc. The erection and restoration works conducted here are merely ensured thanks to local facilities of the autonomous republic.

The public works regarding the rise of the level of public utilities for normal living conditions of every resident of the Nakhchivan Autonomous Republic, the realization of necessary infrastructure projects, the provision of the population and all spheres of economy with electric power and natural gas, the restoration of the roads, the renovation works, and the creation of new industrial fields are successfully carried out in the Nakhchivan AR. To this end, the total investment volume in 2009 was 411,522 million AZN which refers to 33% growth in comparison to 2008. In total, constructed or reestablished 726 different buildings were served to the public in 2009.

Another remarkable point in this field is that the construction of industrial enterprises, education, science, health and cultural centers, executive bodies and infrastructure facilities with modern technical equipments is not only carried out in the centre of the autonomous republic but also in district centers and villages.

Agriculture

The majority of the population of the Nakhchivan Autonomous Republic (about 70 percent) is rural people and occupies with agriculture. The current average share of agriculture in created additional value is one-third.

The first ever agrarian reform of Azerbaijan conducted in Nakhchivan, the transfer of soil to private property, and the privatization of the property of collective (kolkhoz) and state (sovkhoz) farms led the way for swift realization of agricultural reforms in comparison with other fields. The relevant laws and decrees were issued in order to ensure the dynamic of positive changes attained during this time-period and to overcome the problems encountered.

The development of agriculture in the autonomous republic is ensured thanks to intensive factors. The measures such as state supply of different sorts of fruitful seeds and fertilizers to landowners, regular improvement or reestablishment of irrigation systems, delivery of very modern technical equipments to farmers through leasing and etc. have had substantial influence on the growth of agricultural produce. The irrigation of nearly 16,800-hectare territory is realized and 6,919-hectare new plot of land is cultivated owing to the construction of Heydar Aliyev water-house with 100 million cubic meter capacity.

Currently, the first formation stage of agrarian relations relying upon private property has been completed thanks to the conducted agricultural reforms. The systematic measures are fulfilled in order to ensure switch-over of mentioned processes to higher level and formation of modern agrarian-industrial sector. Among these measures, to support the formation of organized trade by state, to provide proper conditions for the necessary production of main foodstuffs, to employ efficient control system on foodstuffs and to prevent the products and services which are inconsistent with ecological, sanitary and veterinary standards, and the state protection to the exportation of agricultural goods and to render the proper credits and technical equipments to the enterprises dealing with agriculture are more important.

"The State Program on reliable supply of foodstuff to the people in the Nakhchivan Autonomous Republic during 2008-2015" endorsed on 17 September 2008 set new directions for raise of industrial production.

Refrigerating storehouses for product preserving have a considerable role to stimulate the agricultural production. During last two years refrigerating storehouses and foodstuff terminals to preserve potato, fruit and vegetable, and varied-capacity storehouses to preserve grain for long time were made functional.

Farming has always been prioritized in the Nakhchivan Autonomous Republic, in the context of climate and soil peculiarities, as well as domestic demand. The grain-growing is the main strategic field in the autonomous republic. Therefore, special attention and care was attached to the development of grain-growing, several credits were allocated for grain-growers. In 2009, 100,760 ton harvest was gathered from the fields of grain-crops and leguminous plants, which is 15% more than 2008.

In the autonomous republic the potato production, along with grain-growing, is of particular importance. 37,423 ton potato was produced in 2009, which is 3,114 ton more than that of 2008.

A lot of important measures have been carried out for the development of cattle-breeding alongside plant-growing. To this end, many credit opportunities have been presented to farmers dealing with cattle-breeding by the banks and other financial organizations so as to ensure assistance to buy and keep livestock.

On the other hand, the State Veterinary Service under the Ministry of Agriculture of the Nakhchivan AR has been established under the aegis of the decree of the Chairman of the Nakhchivan AR Supreme Assembly dated November 30, 2005, in order to ensure modern veterinary service. Continuous measures are carried out regarding the improvement of material and technical equipment of veterinary service. All of these have positive influence on cattle-breeding. In fact, the number of neat cattle was 98,807 and that of small cattle was 589,603 in the autonomous republic as of 01 January 2010, which are respectively 2.9% and 2.2% more than the indicators of 2008.

The poultry-keeping and bee-keeping are notable in the agriculture of the autonomous republic. The traditions and auspicious environment in Nakhchivan proves the poultry farming and bee-keeping to be the most important fields.

In general, agricultural products of 185 million AZN were produced during 2009, which refers to 13.4% increase in comparison with 2008.

Transport

The development of transport infrastructure in Nakhchivan AR is prioritized in recent times. Being separated from the main land of Azerbaijan for more than 18 years, there are a lot of serious problems in the autonomous republic. However, indirect subsidies to meet some expenses of internal produce, concessions, and minimization of passenger transport tariffs by the state aimed at minimizing detrimental effects of mentioned difficulties pave the way for mitigating the negative effect of transport blockade for the people of Nakhchivan to a certain extent.

Arrangement works on transport was conducted and the Ministry of Transport of the Nakhchivan AR was established in 2007. Passing through Iranian territory the opening of regular Baku-Nakhchivan-Baku bus route not only mitigated the existing problems but also positively affected the automobile transport. Concomitantly, new buses were put into operation in order to ensure comfort in internal passenger transportation and to raise service level. The follow-up works are done to modernize the passenger stations.

Currently, for the development of transportation complex many works are being conducted in the autonomous republic regarding the security of transport system, the development of automobile roads and road infrastructure, including global transit roads built on the basis of existing roads, carrying out comfort and secure measures for traffic of vehicles, the frequent utilization of railway infrastructure in internal transportation after becoming modernized, and the modernization of city transport system in the light of principles of ecological cleanness and effective transportation.

Information and Telecommunication

In the Nakhchivan Autonomous Republic, in order to develop the information and telecommunication infrastructure, regular work is conducted regarding the extension of technical advantages of the information and telecommunication network, the far-reaching employment of communication system in production of information service, the swift convey of information, and improvement of the quality of information and telecommunication services.

Being given into operation 155-megabyte/second communication channel through Trans-Asia-Europe cyber-optic main cable, information exchange such as big-capacious talk, video information, fast internet and etc. was launched, and video-conference connection in Nakhchivan State University among 7 foreign and domestic universities was established for the first time.

The completion of building of underground cyber-optic cable line between Nakhchivan and Turkey in 2007 will contribute to the big-capacious and high-tech communication connection. Furthermore, new mobile communication operators began to work, "Nakhtel" wireless communication network covering more than 70 percent of main land of the autonomous republic was given into usage, and wireless internet service was rendered.

As a follow-up work, the completion of underground Nakhchivan-Turkey cyber-optic cable line has contributed to the establishment of capacious and qualitative communication relation.

The volume of post and communication service in 2009 was 31,120 million AZN which is 34% more than that of 2008.

Power Engineering

The grave difficulties of blockade situation in the autonomous republic were seen in power engineering field. Nonetheless, important achievements have been obtained in the wake of political and economic successes of Azerbaijan. Consequently, natural gas transportation after 13-year interruption was restored exchanging through the Islamic Republic of Iran from 2005 onwards. The complete gasification of the autonomous republic was considered in 3 stages. Firstly, many-storeyed buildings in the centers of Nakhchivan city and districts (rayon); secondly, all settlements with earlier gas pipelines; and finally, the villages without ever any gas pipeline will be gasified. Fortunately, the works on gas supply were concluded in 2008, and all settlements of the autonomous republic have been supplied with natural gas.

New power stations ensured the natural gas supply to the autonomous republic, and the transfer into working regime with gas of turbines of Nakhchivan Gas Turbine Power Station paved the way to produce 40-50-megawatt energy. A power station consisting of 10 modules with 87-megawatt power was constructed under the auspices of President Ilham Aliyev in the autonomous republic. Also, the relevant measures as to employment of current alternative energy resources were continuously taken, and a 4.5-megawatt-power Water Power Station on Heydar Aliyev Waterhouse was given into usage. On August 2007, the protocol regarding the construction of "Ordubad" water-power station was signed between the governments of the Republic of Azerbaijan and the Islamic Republic of Iran. An agreement, moreover, was signed with the companies from Turkey on construction of "Bilav" and "Tivi" Water-Power Stations in Ordubad district. The construction of "Bilav" Water Power Station with 20 megawatt-power and "Ordubad" Water Power Station with 36 megawatt-power has been launched.

The measures carried out in electric power sector are substantial contribution to energy security and improvement of permanent energy supply to production and service sectors of Azerbaijan, including Nakhchivan.

Employment

The establishment of new institutions in the context of development of economy, the restoration of the work of institutions which were out of work for a long time, the reestablishment of current institutions and organizations, and the widening of production fields were main factors for opening new work places.

The successful implementation of the State Program on socio-economic development of the regions of the Republic of Azerbaijan (2004-2008) positively spurs the opening of new work places.

Apart from the abovementioned, "The State Program on the Implementation of Employment Strategy in the Nakhchivan Autonomous Republic (2007-2010)" was affirmed and the action plan of the implementation of this program was worked out in order to effectively employ labor opportunities and to ensure effective employment of population.

The employment centers and labor fairs being organized in the autonomous republic at present are of importance to ensure the employment of population. Concomitantly, the Regional Profession-Education Centre of Nakhchivan under the Ministry of Labor and Social Security of Population of the Nakhchivan Autonomous Republic was established in order to arrange the works on the professional preparation, re-preparation and capacity-building of unemployed citizens.