Production linkages and dynamic fiscal employment effects of the extractive industries: input-output and nonlinear ARDL analyses of Azerbaijani economy

  • Elkhan Richard Sadik-Zada
  • Wilhelm Loewenstein
  • Yadulla Hasanli
Original Paper


In this paper, we address the production linkages and employment effects of the petroleum sector on the rest of the Azerbaijani economy. The availability of the input-output tables for the years 2006, 2008, and 2009 enables the assessment of the changes with regard 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 effects. To assess the fiscal employment effects of the oil revenues, which cannot be captured over the static input-output analysis, we employ the cointegrating nonlinear autoregressive distributed lag model. The model reveals a sustainable job creation effect of oil revenues in the case of Azerbaijan.


Input-output analysis Employment Nonlinear ARDL (NARDL) Asymmetric error correction model (AECM) 

JEL classification

C67 D58 D24 P22 Q32 Q33 Q38 


Supplementary material

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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  • Elkhan Richard Sadik-Zada
    • 1
    • 2
    • 3
  • Wilhelm Loewenstein
    • 1
  • Yadulla Hasanli
    • 3
    • 4
  1. 1.Institute of Development Research and Development Policy (IEE), and Faculty of Management and EconomicsRuhr-Universität BochumBochumGermany
  2. 2.Faculty of Economics (Visiting)University of CambridgeCambridgeUnited Kingdom
  3. 3.Azerbaijan State University of Economics (UNEC)BakuAzerbaijan
  4. 4.Institute of Control SystemsAzerbaijan National Academy of Sciences (ANAS)BakuAzerbaijan

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