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THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.80, # 2, 2023, pp. 47-59
TAX REVENUE AND ECONOMIC GROWTH IN RESOURCE-
RICH COUNTRY: EMPIRICAL EVIDENCE FROM
AZERBAIJAN
Javid Seyfullali
International Magistrate and Doctorate Centre, Economy and Technological Sciences
Department, UNEC. Baku, Azerbaijan
E-mail: cavid_seyfullali@unec.edu.az
Received: October 10; accepted December 20, 2023; published online December 25, 2023
ABSTRACT
The purpose of the article is to examine the relationship between taxes and economic
growth in Azerbaijan, which is rich in oil and gas reserves. The study covers the years
2005-2023. The growth of total and non-oil GDP is included in the model as a
dependent variable, and the volume of capital, tax revenues to the budget, changes in
oil prices, and total foreign trade are included as independent variable. When
calculating quarterly indicators, inflation was taken into account and processed using
the ARDLBT model. It has become known that tax revenues in Azerbaijan have a
negative impact on the growth of both total and non-oil GDP in the long term. The
effects of other independent variables were statistically significant and positive. In the
short term, the impact of taxes on overall GDP has not been identified, but a negative
impact on the growth of non-oil GDP has been found. Among other indicators, only
changes in oil prices have a positive impact on overall GDP in the short term. These
results are consistent with modern theories. Limited data on revenues by tax type made
it impossible to assess the impact of various tax types on economic growth. The results
support the idea of pursuing a policy that reduces the tax burden of this sector in order
to increase non-oil GDP. A study of the impact of tax revenues on non-oil GDP growth
can provide substantiated arguments for making decisions on the distribution of the
tax burden to increase the weights of tax types that do not have a negative impact on
economic growth.
Keywords: Tax revenue, tax types, economic growth, non-oil GDP, oil and gas reserves.
JEL kod: E62, H21, O47
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