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THE                      JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.80, # 2, 2023, pp. 28-46

                     ASSESSMENT OF THE MULTIPLICATIVE EFFECTS OF THE

                    MINING AND MANUFACTURING SECTORS IN AZERBAIJAN


                                           Yadulla Hasanli , Gunay Rahimli   2
                                                            1

                    1,2  Scientific  Research  Innstitute  of  Economic  Studies,  UNEC  Institute  of  Control
                    Systems  of  The  Ministry  of  Science  and  Education  of  Republic  of  Azerbaijan
                    yadulla.hasanli@unec.edu.az; g.rahimli@unec.edu.az

                     Received: September 28; accepted December 20, 2023; published online December 25, 2023

                    ABSTRACT

                    In the article, the multiplicative effects of the mining and manufacturing sectors of the
                    Azerbaijani economy have been evaluated and the results have been compared. For
                    this purpose, using the input-output model and multiplier model based on the social
                    accounting matrix (SAM) for the year of 2016, the impact of the increase in demand
                    in these sectors on the demand in these sectors themselves and in the others was
                    evaluated.  The  result  of  the  study  showed  that  although  the  effects  of  the
                    manufacturing industry are high when production relations are considered, the impact
                    of the manufacturing industry on the economy is not as high as expected since some
                    part of the financial resources flows abroad due to the import. And since the mining
                    industry is less connected with the sectors of the country's economy (more precisely,
                    due to the low share of intermediate consumption in the production volume), the input-
                    output multiplier of this sector is small compared to the manufacturing industry, but
                    the SAM multiplier is significantly higher. It should be noted that, because there are
                    more accounts in SAM compared to input-output tables, in the multiplier model based
                    on  SAM,  the  effect  of other  accounts,  including  wages,  capital  costs,  on  demand
                    growth in other sectors is also added. However, this positive difference may not be
                    attributed to all sectors. So, in sectors with a negative balance in the accounts, for
                    example, in sectors where imports exceed exports, SAM multiplier is usually smaller
                    than  the  input-output  multiplier.  The  results  of  the  study  contribute  to  the
                    identification of problems of industry in oil-rich countries and can be used in decision-
                    making as well.

                    Keywords: Manufacturing, multiplier effects, oil-rich countries, input-output model, SAM

                    Jel Classification: C63, D58, E17






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