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Performance Evaluation of the Fruit and Vegetable Subsectors in the Azerbaijani Economy: A Combinatorial Analysis Using Regression and Principal Component Analysis

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  • Niftiyev, Ibrahim

Abstract

Azerbaijan has an oil-led economy, which according to the well-known resource curse and Dutch disease hypotheses decreases the role of non-oil tradable sectors. Nevertheless, the government has actively fostered the growth of non-oil tradable sectors as the export orientation of Azerbaijan is being leveraged by the recently adopted economic policies. However, performance evaluations at the subsectoral level remain rare. The present paper evaluates the performance of the fruit and vegetable subsectors in Azerbaijan from 1995 to 2020 based on multiple key indicators, such as production, profitability, and productivity via principle component analysis (PCA). The purpose of the study was to provide a comparison of two key subsectors in Azerbaijan that are strong candidates for non-oil tradable exports. The results revealed that the vegetable subsector outperformed the fruit subsector in terms of production and profitability from 1999 to 2014; however, it experienced a sharp decline from 2014 to 2015 (the period of the rapid commodity price downturns), which gives rise to the question of whether the extractive industry negatively affected the subsector. Compared to the vegetable subsector, production and profitability in the fruit subsector demonstrated a more stable upward trend. In addition, labor input in both subsectors decreased over time, indicating efficiency gains via new technology transfers and productivity enhancements. Ordinary Least Squares (OLS) results demonstrated a strong and statistically significant negative relationship between the performance of the vegetable subsector with the oil revenue boom period (2008-2015).

Suggested Citation

  • Niftiyev, Ibrahim, 2021. "Performance Evaluation of the Fruit and Vegetable Subsectors in the Azerbaijani Economy: A Combinatorial Analysis Using Regression and Principal Component Analysis," EconStor Conference Papers 235494, ZBW - Leibniz Information Centre for Economics.
    • Handle: RePEc:zbw:esconf:235494
    DOI: 10.22598/odyssey/2021.3
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    References listed on IDEAS

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    3. Niftiyev, Ibrahim, 2021. "Understanding Principal Component Analysis (PCA) in the Azerbaijan Economy: Case Studies of Vegetable and Fruit Sectors," EconStor Preprints 230316, ZBW - Leibniz Information Centre for Economics.
    4. Bayramov, Vugar & Abbas, Gulnara, 2017. "Oil shock in the Caspian Basin: Diversification policy and subsidized economies," Resources Policy, Elsevier, vol. 54(C), pages 149-156.
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    Cited by:

    1. Ibrahim Niftiyev & Gubad Ibadoghlu, 2023. "Longitudinal Principal Component and Cluster Analysis of Azerbaijan’s Agricultural Productivity in Crop Commodities," Commodities, MDPI, vol. 2(2), pages 1-21, May.

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    More about this item

    Keywords

    Azerbaijan economy; agriculture; subsectoral performance; egetable production; fruit production;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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