The road from Baku on the Caspian Sea to Sheki in the north of Azerbaijan rises and falls through the foothills of the Caucasus mountains.

Snowy peaks can just be made out through the haze, and the towering white poplar tree - much admired by Russian poets who visited the region a century ago - becomes an increasingly familiar sight in the surrounding woodland.

The emptiness of the road today belies the fact that this is an ancient trade route - a tiny part of the old Silk Road that linked China with Western Europe before an alternative route was discovered by sea.

Caravanserai - a glimpse of Sheki's past

And driving into Sheki itself it's hard to imagine the town as an important commercial centre. The tempo of life has slowed to a snail's pace. Middle-aged men in broad flat caps cluster in shady corners playing dominoes and draughts.

However a telltale sign of the town's history is a stone-built caravanserai - the eastern equivalent of a coaching inn - one of five that Sheki formerly boasted.

Around a courtyard on the ground floor are stables for camels and horses. Above, private rooms open off a colonnaded gallery. Here merchants slept, drank tea, and struck deals.

Centuries after Sheki's heyday visitors can stay in the same rooms if they are prepared to face the electricity shortages that are a fact of life in the Azeri provinces.

When necessary, heat is provided as it was in the past, by stoves burning timber brought down from the wooded slopes of the Caucasus.

Sheki - once a busy commercial centre

Nomadic traders

One reason why Sheki is now so sleepy is the closure of the silk factory that was until recently the main employer. There's also a notable absence of young men. They have largely left to take up the business of their forefathers - buying goods in one place, and selling them in another.

In the shadow of an ancient Christian church predating the arrival of Islam in Azerbaijan, a young village schoolteacher explained that nearly all the local menfolk were engaged in trade on the other side of the Caucasus mountains, in Russian Dagestan.

Trading shoes from Turkey

Back in the caravanserai, the only other guest at dinner was a successful operator on today's reincarnation of the Silk Road - a young man called Rasim, who'd come home to Sheki for a break.

He said his business was selling Turkish shoes. Sometimes he sold them wholesale from a base in Turkey to visiting Russian traders, sometimes he took them to Baku.

These days bringing goods to a provincial town like Sheki just wasn't profitable, he said.

Precious goods - once the mainstay of the Silk Road

If the old trade routes were devoted to the most precious goods, such as silks and spices, it's now cheaper ones that are most in demand.

Bargains in Baku

And whereas in the past the flow of goods crossed right through the Caucasus from points far east and west, most that arrive here now remain within the region.

One major trading hub is a truly vast market just outside Baku's airport. Buses bring shoppers from Dagestan and Chechnya, and from all over Azerbaijan.

They mill around under a haphazard selection of roofing materials, including at least one circus tent, inspecting clothes and consumer goods gathered from places as far apart as Prague and Urumchi in north-western China.

Televisions from Dubai share space with underwear from Syria.

One more traditional product is the carpet. These are hung out in the open air where their bright patterns gleam in the sunlight, much as they might have done in the distant past.

Russia's financial crisis affects life in Baku

The mood at the market is definitely down. The main problem is that buyers have less money to spend, principally because of Russia's financial crisis.

Last year the sums Azeris in Russia sent home to their families shrank dramatically. According to some estimates two million men, many of them migrant workers, previously contributed two billion dollars a year to Azerbaijan's economy. Now it's much less.

Racketeers - threat to suitcase traders

Another factor causing some families to feel the pinch is the steady outflow of Western businesses, disappointed at the failure of Azerbaijan's oil industry to live up to its promise. The number of well-paid jobs for local employees has accordingly gone down.

The other problem traders face is corruption. They have always had to pay bribes to get their goods into the country, but this is often cheaper than paying import taxes.

Now, they complain, the small trader is increasingly getting sucked dry by racketeers, and edged out of the market by bigger shippers with connections in high places.