Page 63 - Azerbaijan State University of Economics

Nijat Mahmudov: Effects Of Transportation Infrastructure On Economic Growth
In Azerbaijan: ARDl Bounds Testing Approach

The results of the ARDL bounds test are shown in the following table:
Table 2: ARDL bounds test

Test statistic Lower bound critical Upper bound critical
value value
F-statistic 5.1329 6.6163
Prob(F-statistic) 0.0059 0.0026
Bounds test (level) -3.43 5.63
Bounds test (first -2.75 4.69
difference)

The F-statistic is significant at the 5% level, indicating that there is a long-run
relationship between the variables. The bounds test results also show that the test
statistic is outside the bounds for both the level and first difference tests, indicating
that the null hypothesis of no long-run relationship is rejected at the 5% level.

The coefficients of the ARDL model are shown in the following table:

Table 3: Coefficients of the ARDL model
Coefficient Standard
Estimate t-statistic p-value
error
α0 11.432 0.850 13.454 0.000
α1 0.198 0.071 2.809 0.012
α2 0.374 0.064 5.815 0.000
α3 0.029 0.004 6.983 0.000

The results show that transportation infrastructure investment and freight turnover have a
significant positive effect on GDP in Azerbaijan. Specifically, a 1% increase in
transportation infrastructure investment leads to a 0.198% increase in GDP, and a 1%
increase in freight turnover leads to a 0.374% increase in GDP. The time trend variable is
also significant and positive, indicating that there is a long-term upward trend in GDP.

In conclusion, the ARDL bounds testing approach shows that there is a significant
long-run relationship between transportation infrastructure, freight turnover, and GDP
in Azerbaijan. The results suggest that increasing investment in transportation
infrastructure and improving freight turnover can have a positive impact on economic
growth. These findings can be useful for policymakers in Azerbaijan to make
informed decisions regarding infrastructure development and transportation policies
to promote economic growth. However, it is important to note that the results are
specific to the context of Azerbaijan, and caution should be exercised when applying
them to other countries or regions.

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