Even though the costly undeclared war was stopped in May 1994, the country ended up with twenty percent of its territory under occupation and one million displaced people were refugees. Although internal political differentiation took its toll, there were four government changes after political independence. Such happenings have been costly to the economy. Output declined continuously to 1996 and only then did economic recovery begin. After a slow start the government was eventually successful in restoring price stability through the implementation of a rigorous stabilization program which began in early 1995.
Structural reforms are now underway.
Being one of the countries with a huge potential for investment, Azerbaijan is in need of foreign private investment in its infrastructure. This is a country with a potential hydrocarbon resource base of four billion tons. Taking into consideration that certain practical steps have been taken by the government to attract foreign investment in the oil and gas sector, Azerbaijan may reach a production base of 40 million tons per year in the near future and become a large oil exporter. Although Azerbaijan has a traditionally developed oil and gas industry with a strong scientific and production basis as per former Soviet standards, presently the oil and gas industry faces a number of difficulties. To solve these important problems, several important decisions have been made and large scale work has been initiated to successfully integrate Azerbaijan into the world economy in order to benefit from international economic cooperation.