The Role of Social and Physical Infrastructure Spending in Tradable and Non-Tradable Growth

Contemporary Economics, Vol. 13 No. 1, pp. 79-98, 2019

20 Pages Posted: 30 May 2019

See all articles by Hasanov Javanshir Fakhri

Hasanov Javanshir Fakhri

Azerbaijan National Academy of Sciences, Institute of Cybernetics

Jeyhun Mikayilov

Azerbaijan State University of Economics (UNEC)

Sabuhi Yusifov

Azerbaijan Technological University

Khatai Aliyev

Azerbaijan State University of Economics (UNEC); Baku Engineering University

Samra Talishinskaya

affiliation not provided to SSRN

Date Written: March 31, 2019

Abstract

This study investigates the impact of social and physical infrastructure spending on the non-oil tradable and non-tradable sectors while controlling for non-oil capital stock and employment in the Azerbaijani economy for the period 1995-2014. The analysis employs the Engle-Granger and Phillips-Ouliaris cointegration tests using FMOLS estimation results to test for the existence of long-run relationships. The tests results indicate the existence of long-run relationships among the variables. The estimation results reveal positive impacts of both social and physical infrastructure spending on non-oil tradable and non-tradable outputs. However, the impacts on the non-tradable sector are considerably larger than those on the non-oil tradable sector. Developing the non-resource tradable sector, and thereby reducing possibility of the “Resource Curse” and especially the Dutch Disease, is one of the strategic aims of natural resource-rich countries. In this regard, the findings of this research may be useful for Azerbaijani policymakers in taking measures that aim at fostering the development of the non-oil tradable sector, thereby avoiding possible negative outcomes of resource dependency such as the Dutch Disease.

Keywords: Social Expenditures; Infrastructure Expenditures; Non-Oil Tradable Sector; Non-Tradable Sector; Dutch Disease; Azerbaijan

JEL Classification: H5; O1; O2

Suggested Citation

Fakhri, Hasanov Javanshir and Mikayilov, Jeyhun and Yusifov, Sabuhi and Aliyev, Khatai and Talishinskaya, Samra, The Role of Social and Physical Infrastructure Spending in Tradable and Non-Tradable Growth (March 31, 2019). Contemporary Economics, Vol. 13 No. 1, pp. 79-98, 2019, Available at SSRN: https://ssrn.com/abstract=3384531

Hasanov Javanshir Fakhri (Contact Author)

Azerbaijan National Academy of Sciences, Institute of Cybernetics ( email )

9, F. Agayev Str.
Baku, Az1141
Azerbaijan
(+99412) 4301717 (Phone)
(+99412) 4300215 (Fax)

Jeyhun Mikayilov

Azerbaijan State University of Economics (UNEC) ( email )

Istiglaliyyat street 6
Baku, AZ Az1001
Azerbaijan

Sabuhi Yusifov

Azerbaijan Technological University ( email )

Shah Ismayil Hatai ave
Ganja 103
Azerbaijan

Khatai Aliyev

Azerbaijan State University of Economics (UNEC) ( email )

Istiglaliyyat street 6
Baku, AZ Az1001
Azerbaijan

Baku Engineering University ( email )

Hasan Aliyev str. 120
Khirdalan, Baku AZ 0101
Azerbaijan

Samra Talishinskaya

affiliation not provided to SSRN

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
7
Abstract Views
162
PlumX Metrics