Construction is one of the fields of the national economy that produce products. Its activity include creating industrial and non-industrial basic funds for industrial, agricultural and other economic and social sectors, carrying out the restoration, capital and current repair of real estate. Construction directly plays a role in the quickening the scientific and technical prosperity in the economic and social fields, in the formation of material technical basis for the improvement of the regional and spherical proportions of the development, in the process of increasing the country’s economic potential, and raising the protection ability. The construction-installation organizations supplied with modern machines and mechanisms are the institutional units of it. The development of the construction industry in Azerbaijan is closely related with the development of the oil industry. Beginning from the second half of the 19th century, there were constructed many oil refinement institutions in Baku, underground and surface engineering communications, and differently fixed and beautiful buildings which fit the national monumental traditions and were mainly constructed at the expense of oil millionaires of Baku, for example, Baku shollar water pipe, the weaving factory of Z.Tagiyev, “Ismailiyye”(the building in which Presidium Staff of Azerbaijan National Academy of Sciences is situated), home of M.Mukhtarov (currently “Happiness Palace”), the building of city’s Mayor (currently the building of Executive Power of Baku), city’s clinic N 1 (former hospital named after Semashko),the building of State Philharmonic, home of Z.Tagiyev (currently Historic museum).
In the beginning of the 20th century, the construction work related with the reconstruction of the oil industry was carried out with the help of the construction-installation organizations of”Azeroil” unity in regions. In 1928, “Baku city construction” joint-stock company was established on the basis of these. The founders of the company were the Azeroil Unity, Baku Council, Railway Institution and the Caspian Navigation Institution. “Russian-German construction” joint-stock company was working in Azerbaijan till 1930. Since 1930, its legal heir was “Hot Concrete” trust. As the capacity of the construction-installation work increases, qualified construction-installation companies such as Azer oil factory construction, Azer oil construction, Baku water pipe construction, Azer oil compressor construction, Azer oil machine construction, Azer oil electro mounting construction, Azer oil home construction, Caucasian energy construction trusts and others were established. During 1920-41, with the help of the above mentioned construction companies, 1267 million rubles-worth capital investment was used and the construction-installation work 818 million rubles-worth was implemented. 90 big government institutions and numerous workshops were constructed and were given to use, many existing factories and plants were reconstructed, and were provided with new equipments. Baku oil processing plant (afterwards named after Qara Qarayev), Neftchala and Baku iodine plants, Keshle machine-building plant, “Red October” furniture factory, sewing factory named after Volodarski, many cotton-cleaning and canning plants, tea factories were constructed in this period.
In comparison with the war time during the years of 1946-50 state capital investment was increased to 4 times and was more than 1 billion rubles. At the expense of these investments, 34 industrial institutions, as well as, electrical engineering plant radio plant, rolling pillows plant, and other industrial institutions were constructed in Baku.
In 1951-70, the capital of 15.3 billion rubles was invested to the economy of the Republic with the help of all financial sources and 196 state industrial institutions were constructed (Sumgayit synthetic rubber plant, Baku tire plant, Azerbaijan tube-rolling plant, Sumgayit aluminum plant, Mingechevir hydroelectric power station, Eli-Bayramli State Region Electric Power Station, etc).
In the 70s of 20th century, again positive substantial changes began in the construction field as a result of the measures that were prepared and carried out by the Azerbaijan leadership. So, in 1971-75 the capital investment to the economy was increased 29 % in comparison with 1966-70. 45% of the capital investment was directed to the development of the industry. In this period, 64 new big industrial institutions, 32 new workshops and production institutions were constructed and were given to use. Among the newly constructed institutions, there were Baku Domestic air conditioners plant, Sumgayit plant of compressors, sewing and shoe parts factory in Baku, Khudat canning plant, first 14 wine producing plants, 4 cheese plants, and other agricultural institutions. In 1971-75, more intensive development was reached in the fields which were producing national consumer goods. 40 institutions out of 64 were working in the light industry fields- food, meat and milk, flour grinding, and the industry of furniture. The work of the large scale improvement of the existing engineering and chemical industry, the armament of these institutions with modern technical equipment were done. 70% of the production directed capital investments were used with this aim. If the industry of the Azerbaijan Republic contained 735 institutions both big and small each year, the number of such institutions reached to 1062 in 1983, 1103 in 1985. During 1969-83, on average 23 industrial institutions were put into operation each year, 7 (30.4%) of which were the engineering industry institutions.
During 1971-75, substantial changes were also observed in the civil construction. The capital investments of the governmental and cooperative institutions and companies directed to the construction of new houses, communal-cultural-household, health and educational objects comprised 1325 million rubles, and that was more that 1/5 of the all capital investments. On the basis of all financial resources, 147.500 apartments, secondary schools for 179.000 pupils, kindergartens for 25.500 children, cinemas for 13.000 people, clubs and cultural centers for 34.800 people, hospitals with 5.900 beds, and the objects of a number of household service, communal economy, and other fields that serve the population, the total range of which is 6.915.000, were built and put into operation.
In 1976-80, the capital investment was increased 1.4 times in comparison with the previous 5 years. In this period, more than 80 industrial institutions, production powers and production fields began to operate. These were ED-AVQ ELOU-AVT unit in the new Baku oil processing plant (currently Oil Processing Plant after Heydar Aliyev), initial processing plant of wool in Yevlakh, pile yarn factory in Sumgayit, meat processing and milk plants in Ganja, flour enterprises in Nakhchivan, 50 cattle-breeding complexes, poultry factories, breeding farms. Reconstruction, development of oil engineering, chemical, oil chemistry, oil processing and other industrial fields and the provision of these fields with technical equipments was carried out. As a result of the large scale capital investments, basic funds of national economy increased 83% , and also basic production funds increased 91% in 1980 in comparison with 1970.
During the years of 1970-80, 16.8 billion rubles were invested to the economy, and the diversified economy was founded, the basis of this economy is the highly developed industry. 176 industrial institutions and production fields were constructed and put into use during that time. In the 1980s, the intensive development of the construction field provided material and technical base for Azerbaijan to become a great center of producing numerous modern machinery and equipment, chemical, light and food industry products. During the Soviet rule, 53% of the capital invested to the development of the republic’s economy was in 1970-80s, it was 2.1 times more than the capital investments of previous 10 years- 1960-70.
Capital resources were invested mainly the fields of industry which produce consumer goods in 1971-75, and in 1976-80 fuel and energy complex was moved forward. The 55-60% of capital investments used in the industry was directed to the development of this complex, which is one of the factors that influence country’s economic independence, and it served to the improvement of the fuel and energy balance of the country and to the self-providing conception.
In the recent 30 years, generation powers of more than 3 thousand MWt and electric transmission lines of 70 km were used in the energy system, so, real opportunities of the country’s energy system was increased more than 2 times and it created a basis for the energy security of the Azerbaijan Republic. Today, Azerbaijan has the most powerful and independent energy system in the South Caucasus.
In 1993-95, the restoration of socio-political stability in the country, signing the “Contract of the Century” with the influential foreign companies led the construction field to revive and to develop in a new concept. In 1996, the investments to main capital increased already by 2.1 times in comparison with 1995. In 1997, Azerbaijan reached to the first place among the CIS countries according to the level of investments to the main capital. This indicator in 2005 was 22.2 times more than the capital investment of 1995. In 2004, the index of the investments to main capital increased 2 times in Belorussia, 4.4 times in Kazakhstan, 1.2 times in Russia, 1.9 times in Ukraine, and 19 times in Azerbaijan in comparison with the year of 1995. In the 15 years of independence, 22666.9 million manats were invested to the development of main capital at the expense of all financial sources in Azerbaijan, 78.3% of this investment was during 2001-2005. The average annual capacity of these investments in 1991-95 was 71.3 million manats, this indicator in 1996-2000 was increased to 910.7 million manats, in 2001-2005 to 3.551.400 manats.The establishment of suitable investment environment provided the large scale flow of the foreign investments to the country’s economy. 68% of the 22.310.300 manats investments that were directed to the main capital of the country were foreign investments.
In 2003-2005, the investments of 1202.9 million manats were used in the regions except Baku, and this was more in comparison with the previous years. The special weight of investments to the main capital in these regions increased 3 times in 2005, the share of this investment in 346 500 permanent work places that were established during October 1, 2003 and January 1, 2006 was 173 100 – 84%.
Today, the construction complex has become one of the important fields of national economy, in 2005 its special weight of GDP was increased to 10.0% from 3.7% in 1995. 58 800 people and 1.5% of people, who are engaged in economics, work in this sector.
The State Town-building Architectural Committee and The Ministry of Emergency in the Azerbaijan Republic are empowered with carrying out the state politics concerning the construction, architecture and town-building of the country. In 1996-2005, the following objects were built and given to the use: “Qurtulush” drilling rig, turbines in Mingechevir and Yenikend hydroelectric power stations, gas-turbine unit in Baku heating center, Sangachal terminal, “Coca-Cola” and “Pepsi-cola” plants, international aero station complex and cargo terminal in the International Airport after Heydar Aliyev, steam-generator complex in the Sumgayit ethylene-polyethylene plant, the workshop of the “European Tobacco” Baku open joint-stock company (annually 2.6 billion cigarettes), “Baku Steel Company” plant that produces 70 000 tons of construction metals annually, washing powder plant in Baku (production capacity – 12 000 tons),Baku nut producing plant, the sturgeon plant in Neftchala, Caucasian canning plant in Khachmaz, tomato and bear producing plants in Lenkeran, “Azbentonit” plant in Absheron, Nakhchivan International Airport, Shamakhi television plant, water reservoir in Vaykhir hydro junction, milk producing plant in Nakhchivan, nut producing plant in Qakh region, fruit juice producing plant in Sheki,Julfa-Nakhchivan main gas pipe, concrete plant in Babek region, sport-Olympic complexes, modern hotel complexes, office buildings, job centers, automobile roads with solid surface, etc in Baku, Ganja, Nakhchivan, Quba and other cities. In 2001-2005, 108 industrial institutions, workshops and production objects which played an important role in the development of the economy were constructed and used. 55-65% of the costs of the construction-installation works comprise the expenses for the construction materials and constructions. 80% of the demand for the material resources of the construction is met by the construction materials of the industry, metallurgy, wood processing, and pulp and paper fields.