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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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