"Macroeconomic performance of energy consumption on economic growth in Azerbaijan and Turkey" Course Work
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Course
Macroeconomics
Institution
Macroeconomics
This study is aimed to comparatively analyze the relative macroeconomic performance of energy consumption on economic growth in Azerbaijan and Turkey. For this purpose, the annual data from 1991 to 2016 is examined for cointegration and causality analysis, adopting a Vector Error Correction Model f...
macroeconomic performance of energy consumption on economic growth
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Abstract
This study is aimed to comparatively analyze the relative macroeconomic performance of energy
consumption on economic growth in Azerbaijan and Turkey. For this purpose, the annual data from
1991 to 2016 is examined for cointegration and causality analysis, adopting a Vector Error
Correction Model for cointegrated time series data. The results support growth hypothesis for
Turkey and neutrality hypothesis for Azerbaijan. Moreover, the paper tests the convergence
hypothesis, which results the assumption that on average 59 years will be needed for two countries
to converge.
1
,Content
Country specification.....................................................................................................................................3
Literature review...........................................................................................................................................4
Macroeconomic statistics..............................................................................................................................6
Empirical analysis.........................................................................................................................................12
Methodology and empirical results.............................................................................................................13
Convergence Hypothesis Test......................................................................................................................15
Bibliography.................................................................................................................................................18
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, Country specification
Turkey and Azerbaijan were the primary choice to analyze, since they share cultural and historical
background and at the same time are different in economic achievements. These countries are close
not only geographically, but also united by the common national and spiritual heritage, national
identity and solidarity. However, there are cases in history when their relations were not based on
the mentioned historical factors or similar national fanatic aspects. Azerbaijan-Turkey relations are
also considered to have very strong economic constituents (Həsənov, 2005). The main reasons to
play an important role in the development of economic relations between these two fraternal nations
were geopolitical, political and ideological factors.
It is also worth to mention that Turkey took a huge part in cultural, social and economic progress of
Azerbaijan. For instance, the significant development in relations was observed after Azerbaijan’s
independence and Turkey was the first state to recognize Azerbaijan’s independence. This historical
event opened the door for mutual cooperation in numerous spheres. The countries have started
scientific-technical and cultural cooperation in 1990 – 1992. Baku - Istanbul airline was built as
soon as Azerbaijan became independent. Turkish TV programs started appearing on Azerbaijan TV.
Turkish newsletter offices were opened in the territory of Azerbaijan. Education and health
ministries expanded their exchange programs of students and staff. Women’s organizations of both
countries started a deep cooperation. Other cultural relationships such as music festivals and film
exhibitions have been successfully developed and the list goes on (Məmmədli, 2006).
In this way, Turkey and Azerbaijan compile a harmonious pair to race in economic development.
However, Azerbaijan has been falling behind, since it is still considered a developing nation, while
Turkey has already become a developed one according to CIA World Factbook (2016). The next
question might arise: “What are the reasons for Turkey’s success and why is Azerbaijan lagging?
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