THE EXPORT-LED GROWTH HYPOTHESIS FOR AZERBAIJAN

The aim of this paper is to test the export-led growth hypothesis for the Republic of Azerbaijan. Azerbaijan is an oil-exporting country and the share of oil and oil products in total exports is 94.78 percent in 2009. In this paper, the export-led growth hypothesis is tested for Azerbaijan using cointegration and error correction model techniques for the 1996-2008 period. Long-run and short-run relationship was found between real GDP, and exports and imports. The results fail to find any support for the proposition that exports Granger cause GDP. However, real GDP Granger causes exports. The findings of this study showed that export-led growth hypothesis is not valid for Azerbaijan.