The industry is one of the most developed areas in Azerbaijan. It covers fuel and energy, chemistry, mechanical engineering, metallurgy, food industry, light industry and other areas. The industrial development began in mid-1950s as the result of the nationa leader Heydar Aliyev's efforts.

As the result of radical changes in the national economy, the period from 1995 to 2004 saw serious successes in the field of industry. The conclusion of production sharing agreements on oil and gas fields with large foreign companies, ensouraged rapid development of oil and gas industry. It should be noted that processing industry was developing along with the production. Production rates in the processing industry increased in 1.5 times, including by 43% in food industry, 2 times in production of woodwork, 30% in paper production, 2.5 times in chemical industry, 5 times in construction materials, and 3 times in metallurgy.

Azerbaijan began to manufacture cash registers, microcalculators, telephones, consumer electronics, plastic doors and windowpanes, oil pipes and other products. The manufacturing of numerous products, which were previously imported from foreign countries, in Azerbaijan allowed to expand the range and availability of products and eliminate the dependence on exportation.

This encouraged business activities and development of small businesses in Azerbaijan. The open door policy of the national government resulted in raise of the number of foreign and joint enterprises in 3 times. Nearly 200 enterprises with foreign investments from 63 countries, are currently operating in Azerbaijan and thousands of new workplaces were opened. The obvious increase in the number of newly established economic enterprises, the expansion and dynamic development of small businesses and business undertakings of individuals all indicate at the ongoing strengthening of non-state sector's role in the national economy.

The specific weight of non-state sector in gross production of industrial products increased from 5.5% in 1995 to 60% in 2004. The specific weight of industries in GDP increased from 29.6% in 1995 to 38% in 2004.

The main objective of the state policy in the field of industry for the medium future, will be the ensuring of steady and rapid production growth, structural improvement and increasing efficiency. The main activities will include the modernization and reconstruction of equipment facilities, increasing the competitiveness of national products, the flow and efficiency of investments, intensified development of non-oil sector and encouraging of development processes in the processing industry.

The dynamic development of oil sector will create the opportunities for the accelerated development of non-oil sector as well. At the same time, the favorable investment environment in non-oil sector, privatization processes and other reforms, will encourage non-oil sector development during 2005-2008.

At the same time, closest attention will be paid to the following activities for the development of non-oil sector:

• Intensification of restructurization and privatization processes;

• The continuation of restoration of the activity of enterprises who have potential sale markets and whose activity is deemed economically expedient;

• Intensification of the transtion to international standards at the base of latest technologies;

• Development of free competitive environment;

• Intensification of the attraction of investments;

• Development of traditional national creative works;

• Strengthening and improvement of the material and technical basis of scientific-research institutes which correspond to the contemporary market requirements, for the purposes of the development of applied sciences.

Source - Azerbaijan Portal (by Heydar Aliyev Foundation)