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Javid Seyfullali: Tax Revenue and Economic Growth in Resource-Rich Country:
                                                      Empirical Evidence from Azerbaijan

                    INTRODUCTION
                    Scientific discussions about state intervention in economic processes began with the
                    works  of  early  mercantilists  and  continued  by  representatives  of  physiocracy
                    (François  Quesnay  and  others),  classical  (Adam  Smith,  David  Ricardo,  etc.)  and
                    neoclassical theories (A. Marshall, A. Pigou, etc.). With the advent of Keynes's theory,
                    this issue rose to a completely new level and became one of the main subjects of
                    debate between neoliberalists and neo-Keynesians. One of the few points of contact
                    between these mutually exclusive approaches is the undeniable role of the state in the
                    production and maintenance of public goods.

                    The need to produce public goods, which is accepted as one of the main attributes of
                    welfare in modern theories of economic development, determines the formation of the
                    state’s fiscal policy and the use of taxes to create sources of government spending. On
                    the  other  hand,  government  spending  is  one  of  the  important  aggregates  of  the
                    country’s  gross  domestic  product,  and  also  has  a  multiplier  effect  on  other
                    macroeconomic parts of national wealth (consumer spending, investment). In addition
                    to the above, taxes, which are the main source of government expenditure, are also
                    seen as a factor that slows down and impedes economic growth.

                    In the modern world, the globalization of economic processes and the development of
                    digital technologies have led to a weakening of the economic borders of countries and
                    a significant increase in the mobility of capital, technology and labor. These processes
                    have also brought to the fore the issues of preserving these resources in the country
                    and attracting them from foreign countries. In the current situation, the attractiveness
                    of  the  tax  system  for  investors,  especially  in  developing  countries,  has  become
                    particularly  important.  In  such  conditions,  the  state’s  economic  policy  faces  two
                    dilemmas: a) increase the production of public goods to meet the growing demand for
                    them - this leads to an increase in government spending and the need for additional
                    sources of income, including additional tax revenues; b) reduce the tax burden of the
                    economy as much as possible in order to support the development of economic growth
                    factors in the country - this can lead to a relative decrease in state tax revenues. To
                    solve the mentioned problem, numerous studies have been conducted and similar and
                    different empirical results have been obtained. Differences in the level of development
                    of  countries,  competitiveness,  the  structure  of  national  wealth,  capital  and  labor
                    intensity of the established economy, the efficiency of markets, innovation systems
                    and other important factors are also reflected in the impact of taxes and government
                    spending on economic growth.





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