Page 40 - Azerbaijan State University of Economics
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Yadulla Hasanli, Gunay Rahimli: Assessment of The Multiplicative Effects of The Mining and
Manufacturing Sectors nn Azerbaijan
From the results, we can see that an additional demand of 144,000 manats was created
for ‘Trade and repair of transport uses’, 128 thousand manats for ‘Production of non-
metallic products and base metals’, and 114 thousand manats for ‘Agriculture, forestry
and fishing’. In general, although the indirect effects on the production of other sectors
are small, due to low level of connection of mining sector with others, the increase in
the value added of this sector greatly boosts the development of the country's economy
through the induced effect. In the research, then we evaluated the multiplier effects of
the additional demand for the products of the ‘Production of food, drinks and tobacco’
sector. Table 4 shows the results of this assessment. It can be seen from the table that
the creation of an additional demand of 1 million manats for the product of the
‘Production of food, drinks and tobacco’ sector creates a total demand of 2.3 million
manats due to production relations.
1.2 million manats of this demand is in this sector itself. Among other fields, the
highest value of increased demand is in ‘Trade and repair of transport uses’ with 261
thousand manats, the second highest value is in ‘Agriculture, forestry and fishing’
with 176 thousand manats, and the third highest value is in ‘Production of non-
metallic products and base metals’, which can be explained by the use of trade services
and agricultural and non-metallic products as intermediate products in the ‘Production
of food, drinks and tobacco sector’. As it can be seen, there has been an increase in
other sectors to some degree, too. The lowest rates of growth were observed in
services such as ‘Services of library, archive, museum and other cultural institutions’,
‘Education’, ‘Healthcare’, ‘Rest, entertainment and art services’, ‘Social services’ and
‘Public administration and defense’, because ‘and shows that these services are used
very little in the organization of production of food, drinks and tobacco products.
In the SAM-based multiplier model, since we can estimate the effects of growth in
value added along with intermediate consumption relationships, our expectation
would be that the results of the second model would exceed the results of the first
model, as in the case of the mining industry. However, contrary to this expectation,
according to the SAM-based multiplier model, the effects of investments in the
‘Production of food, drinks and tobacco’ are lower, with the value of 2.18 million
manats. The reason for this is that, in addition to taking into account value added
effects, the SAM-based model also takes into account import and export relations.
Thus, the total demand for goods and services in each sector is met by local production
and imports, and we face the situation of losing a part of the effects caused by the fact
that most of the demand for the products of this sector is imported.
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