Page 103 - Azerbaijan State University of Economics

73. Ibrahim Niftiye: Descriptive Analysis of Employment in Azerbaijan: Possibilities of the Dutch Disease

74.
75.
Figure 1: Decomposition of real GDP, in %. Figure 2: GDP growth rates, in % (right axis) and oil
prices, in USD per barrel, BRENT trademark (left
axis).

120,0 40,0
60,0

100,0 30,0
50,0
20,0
80,0
40,0
10,0
60,0
30,0 0,0
40,0
20,0 -10,0
20,0
10,0 -20,0

0,0 -30,0
0,0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019
Oil Prices, USD per barrell
Mining Manufacturing
GDP growth rate
Agriculture Services

Others Source: World Bank national accounts data, OECD
National Accounts data files, and BP Statistical
Source: SSCRA, author’s calculations. Review of World Energy.

Oil booming was accompanied by REER appreciation and extremely high shares of
mineral products in the total exports (more than 80% in 2008–2018 period; see Fig.
3). Overvaluation of the national currency made non-booming sectors less
competitive, pushing down the output of the manufacturing sector compared to the
mining sector, as shown in Figure 4, where the ratio is higher than 1 starting from
2006. Figure 4 also depicts via the data related to current account balance being a
share of GDP. In fact, oil booming boosted the trade balance in favor of a surplus;
however, it began to slow from 2014–2015. Consequently, the rapid economic
progress decelerated after the sharp commodity price downturn, signaling the
unreliable nature of commodity exports compared to value-added manufacturing
exports. This aligns with the general framework of the Dutch disease model.

Considering the previously discussed aspects of the Dutch disease theory and the
trends in the economy of Azerbaijan, the main research question of this study is
formulated as follows: is the distribution of the statistical data in employment
covering the period between 2000–2018 consistent with the Dutch disease
hypotheses? To answer this question, a descriptive analysis is carried out to observe
the statistical properties of employment data in the mining, manufacturing,
agriculture and services sectors. These data are compared with features of the
original model presented by Corden and Neary (1982) and Corden (1984).
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