The Impact Of Trade Openness On Economic Growth In Azerbaijan

The present study elaborates on the impact trade openness has on economic growth in Azerbaijan. The research tries to contribute to the ongoing debate in this field of research and also aims to provide for a country based case study since there have been very limited information if at all research available for the case of Azerbaijan. The Data is comprised and taken for the years starting from1992to2011, and the subsequent data for the variables taken for this period.Thus the present study is assessing the impact of trade openness by using the independent variables of Oil Export, Import Volume, Inflation, Investment, Population, Tertiary Education, FDI net inflow, Trade Shares and Government Expenditure on the dependent variable which is GDP per capita. The literature review is discussed in deatail including the major works and the new studies on trade openness and growth. The literature reviewed on the topic is at times controversial, with different authors having different results and different arguments on the impact of trade openness on growth. Earlier studies tend to support the view that there is a strong relationship between trade openness and economic growth, whereas more recent studies argue that trade openness is not sufficient enough in explaining growth. Nevertheless one can see from the literature review that there is a general tendency that trade openness has a significant impact on economic growth in general.Limits to the study as well as the inclusion of other important variables that might be possible when data becomes available in the future is discussed that might be of high importance to the ongoing debate on the topic. The regression results indicate that Oil Export, Tertiary Education Enrollment, CPI and Trade Shares is significant in explaining changes in GDP per capita for Azerbaijan, a few other indicators are tested on their significance level in regards to the dependent variable GDP per capita.