Page 37 - Azerbaijan State University of Economics
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THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.80, # 2, 2023, pp. 28-46
DATA
The 2016 input-output table was used as the input-output model's database. A
simulation model was constructed based on the table, which had 96 sectors, but was
reduced to 25 primary sectors by grouping appropriate areas.The database of the
multiplier model based on the SAM is the social accounting matrix built by adding
production factors, households, government, enterprises, investment/savings and rest
of the world accounts to the input-output table for the year of 2016.
FINDINGS
Firstly, in the article, using simulation equations (3) and (6), the multiplier effects of
the 1 million manat investment in the Mining sector have been evaluated through the
multiplier models based on the input-output table and the social accounting matrix,
and the results of both models are reflected in table 3.
The third column of the table shows the results of the assessment based on the input-
output model. It can be seen from the results that 1 million manat investment allocated
to the mining sector creates a demand for the total output of about 1.2 million manat
in the country. The largest part of this demand - 1.08 million manats is for the output
of the mining sector itself, and the remaining 0.12 million manats is for the output of
other sectors of the country's economy. This shows that the mining sector has very
weak connections with other sectors of the country's economy. The reason for this is
that this sector mainly includes of the oil and gas sector, and oil and gas are mostly
exported in the form of raw materials, and as a result, less intermediate products are
bought from other economic activities. In general, it can be seen that the increase in
the demand for the production of the mining sector by 1 million manats creates
demand of 25 thousand manats for the products of the ‘Production of non-metallic
products and base metals’ sector, 14.5 thousand manats for the products of the
‘Production of machinery, equipment, furniture’ sector, 12 thousand manats for the
products of the ‘Transport and warehousing’ sector, 10.8 thousand manats to the
‘Professional and technical activities’ sector. Because the mining sector uses the
intermediate products of other sectors when orginizing its production. There is a
demand for the products of these sectors to some degree. However, as we mentioned,
only production relations are taken into account here. Thus, when the demand for the
product of the mining sector increases, it is clear that this sector buys intermediate
products from other sectors, which is called the direct effect. Also, in order to produce
the additional output volume of these sectors, their demand for the products of other
sectors also increases.
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