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THE                      JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.80, # 2, 2023, pp. 47-59

                    This  issue  seems  more  relevant  for  countries  whose  economic  growth  is  formed
                    primarily  through  the  export  of  natural  resources,  including  Azerbaijan.
                    Diversification of the economy, increasing the share of the manufacturing sector and
                    other industries in the structure of national wealth are among the main priorities of the
                    economic policy pursued in our country. In this regard, the study of the relationship
                    between taxes and economic growth in Azerbaijan is adopted as the purpose of the
                    article. The results of the study can provide substantiated scientific arguments for
                    improving state tax policy in terms of supporting economic growth.

                    LITERATURE REVIEW
                    Blanchard and Perotti (2002) used a structured VAR model to analyze the dynamic
                    impact of fiscal policy changes on real gross domestic product growth. They found a
                    positive link between government spending and economic output and a negative link
                    between tax revenue and economic growth.

                    Arnold  and  co-authors  (2011)  analyzed  the  relationship  between  tax  revenue  and
                    economic growth using the economic data of 21 countries in the OECD (Organization
                    for Economic Co-operation and Development). They found a negative link between
                    tax revenue and economic growth in long term. They also analyzed how the structure
                    of tax revenue impacts economic growth and they found that increasing the weight of
                    indirect taxes has a positive impact on GDP (Gross Domestic Product) per capita.

                    Acosta-Ormaechea  and  Yoo  (2012)  analyzed the impact  of different  tax types on
                    economic growth both generally and focusing separately on high and mid-income and
                    low-income countries. The general results show that there is a negative impact of both
                    income tax and social security payments on economic growth, a positive impact of
                    transition from income tax to property tax on economic growth, and a positive impact
                    of decreasing income taxes while increasing indirect taxes on economic growth. The
                    authors found a  positive impact  of an increase in the weight of consumption and
                    property taxes on economic growth in high-income countries, while they found no
                    statistically significant relationship between an increase in the weight of consumption
                    taxes  and  economic  growth  in  mid-income  countries.  The  authors  found  that
                    increasing income and corporate profit taxes in both high and mid-income countries
                    results  in  lower  economic  growth.    The  authors  found  no  statistically  significant
                    relationship between different types of tax revenues and economic growth in low-
                    income countries. The absence of any statistically significant links may be due to weak
                    tax administration in less developed lower-income countries.







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