Page 54 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.80, # 1, 2023, pp. 54-66

EFFECTS OF TRANSPORTATION INFRASTRUCTURE ON
ECONOMIC GROWTH IN AZERBAIJAN: ARDL BOUNDS
TESTING APPROACH

NIJAT MAHMUDOV

Azerbaijan State University of Economics (UNEC)

E-mail: [email protected]

Received: January 20; accepted May 05, 2023; published online June 26, 2023

ABSTRACT
Transportation infrastructure is a crucial component of any economy, as it enables the
movement of goods and people, thereby facilitating trade and economic activity. This
article investigates the impact of transportation infrastructure on economic growth in
Azerbaijan using the ARDL bounds testing approach to estimate the relationships
between the variables. The article uses annual time series data from 2000 to 2020 on
variables such as real GDP, investment on transport infrastructure and freight
turnover. The results show that transportation infrastructure has a significant positive
impact on economic growth in Azerbaijan in the long run. Specifically, a 1% increase
in investment on transport infrastructure leads to a 0.47% increase in real GDP in the
long run, indicating that transportation infrastructure plays a vital role in promoting
economic growth in Azerbaijan.The findings of this study have important policy
implications for Azerbaijan. Investments in transportation infrastructure should be
prioritized to ensure that the country's infrastructure is of high quality and meets the
needs of the growing economy. This study contributes to the literature on the
relationship between transportation infrastructure and economic growth and provides
insights that can inform policy decisions in Azerbaijan and other developing countries
facing similar challenges.

Keywords: Transportation infrastructure, economic growth, ARDL bounds testing,
economic activity, investment.

JEL Classification: R40, O18, H54

INTRODUCTION
Transportation infrastructure is a critical component of economic development,
enabling the efficient movement of people, goods, and services across regions and
countries. The relationship between transportation infrastructure and economic
growth is complex and multifaceted. In Azerbaijan, transportation infrastructure has
been a key driver of economic growth, facilitating the movement of goods and people
across the country and connecting Azerbaijan to the global economy.

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