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Production Linkages and Employment Effects of the Petroleum Windfalls: An Input-output Analysis of Azerbaijani Economy

Author

Listed:
  • Elkhan Richard Sadik-Zada

    (Institute of Development Research and Development Policy, Ruhr-Universit t Bochum, Germany)

  • Wilhelm Loewenstein

    (South African-German Centre for Development Research, University of the Western-Cape, South Africa)

  • Y. Hasanli

    (Scientific Research Institute of Economic Studies, UNEC, Azerbaijan,)

Abstract

In this paper, we address the production linkages and employment effects of the petroleum sector on the rest of the Azerbaijani economy. We employ an input-output (IO) analysis. The availability of the IO tables for the years 2006, 2008 and 2009 enables the assessment of the changes with regards to the multiplier effects of the extractive industries over the first 3 years of the oil boom. We find that despite advanced infrastructure, well-developed petrochemical complex and local content policies the degree of integration of the international oil and gas business into the domestic economy is rather weak. In addition, both production and job creation multipliers slightly decreased after 3 years of exponential growth rates of oil production. The assessment of the production multipliers indicates that additional investments in processing, construction and network industries have the highest production linkages. Concerning employment multipliers agriculture, education, health care and public sector have the greatest job creation multipliers.

Suggested Citation

  • Elkhan Richard Sadik-Zada & Wilhelm Loewenstein & Y. Hasanli, 2019. "Production Linkages and Employment Effects of the Petroleum Windfalls: An Input-output Analysis of Azerbaijani Economy," International Journal of Economics and Financial Issues, Econjournals, vol. 9(1), pages 225-233.
    • Handle: RePEc:eco:journ1:2019-01-28
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    Citations

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    Cited by:

    1. Kyriakos Maniatis & David Chiaramonti & Eric van den Heuvel, 2021. "Post COVID-19 Recovery and 2050 Climate Change Targets: Changing the Emphasis from Promotion of Renewables to Mandated Curtailment of Fossil Fuels in the EU Policies," Energies, MDPI, vol. 14(5), pages 1-44, March.
    2. Olle Östensson, 2020. "The potential of extractive industries as anchor investments for broader regional development," WIDER Working Paper Series wp-2020-87, World Institute for Development Economic Research (UNU-WIDER).

    More about this item

    Keywords

    Input-output Analysis; Direct Linkages; Employment Effects; Enclave Industry; Azerbaijan;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • P22 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Prices
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)

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