This document analyzes the size and causes of Azerbaijan's shadow economy. It uses two methods - the currency ratio method and mirror statistics from foreign trade indicators - to estimate the size of Azerbaijan's shadow economy between 1992-2011. The currency ratio method estimates the shadow economy ranged from 0% of GDP in 1993 to 76.6% in 2002. Mirror statistics compares Azerbaijan's foreign trade data with its trade partners' to identify unregistered imports and exports. The analysis aims to provide policymakers with accurate information on the shadow economy to help address its impacts and develop effective policy responses.
The paper proposes two econometric models of inflation for Azerbaijan: one based on monthly data and eclectic, another based on quarterly data and takes into account disequilibrium at the money market. Inflation regression based on monthly data showed that consumer prices dynamics is explained by money growth (the more money, the higher the inflation), exchange rate behaviour (appreciation drives disinflation), commodities price dynamics (“imported” inflation) and administrative changes in regulated prices. For the quarterly model, nominal money demand equation (with inflation, real non-oil GDP and nominal interest rate on foreign currency deposits as predictors) and money supply equation were estimated, and error-correction mechanism from money demand equation was included into inflation equation. It is shown that disequilibrium at the money market (supply higher than demand) drives inflation together with money supply growth and nominal exchange rate depreciation and administrative changes in prices. No cost-push variables appeared to be significant in this equation specification. Both models give similar inflation projections, but sudden changes in money demand (2012) lead to significant differences between the projections. It is shown that money is the most important inflation determinant that explains up to 97.8% of CPI growth between 2012 and 2015, and that in order to keep inflation under control the Central Bank of Azerbaijan should link money supply to real non-oil GDP growth.
Authored by: Alexander Chubrik, Przemyslaw Wozniak, Gulnar Hajiyeva
Published in 2012
The article describes the importance and relevance of macroeconomic modeling in the development of economic sectors. The problems of applying the methods of macroeconomic modeling both optimization and simulation in the practice of planning and managing the national economy are analyzed. Mukhitdinov Khudoyar Suyunovich | Juraev Farrukh Do’stmirzayevich "Methods of Macroeconomic Modeling" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Special Issue | International Research Development and Scientific Excellence in Academic Life , March 2021, URL: https://www.ijtsrd.com/papers/ijtsrd38498.pdf Paper Url: https://www.ijtsrd.com/economics/other/38498/methods-of-macroeconomic-modeling/mukhitdinov-khudoyar-suyunovich
This paper analyzes the distribution of real household incomes and consumption growth in Azerbaijan between 2004 and 2009. Decile-specific price deflators were used to calculate real incomes and consumption dynamics. The analysis, which was based on growth incidence curves, showed that economic growth between 2004 and 2009 was definitely propoor, both for real incomes and real consumption. Our results also indicate that household incomes were much more strongly correlated with oil GDP than with non-oil growth. Employment was the most important source of income growth for all deciles. Poorer households changed their coping strategies from subsistence agriculture to paid- and selfemployment. Although this led to a dynamic increase in their incomes, it hardly changed their consumption basket, with food still constituting more than 65% of spending. This means that their actual standard of living level did not change very much. Our results also indicate the low effectiveness and efficiency of social transfers; they were found to be almost evenly distributed among income deciles and played a negligible role in the income growth of the poorest households.
Authored by: Alexander Chubrik, Mateusz Walewski
Based on the data of Japanese Prime metropolitan area from 1955 to 2013, this paper studies the effect of industry agglomeration and population aggregation on economic growth in Tokyo metropolitan area. Through the processing of the panel data, we find that the industry agglomeration in Japanese Prime metropolitan region has apparently positive impacts on its economic growth, and also, population aggregation can positively effects its economic growth. Following this paper is try to carry out research on Tokyo —the core city of Japanese Prime metropolitan area, to study the influence of industry agglomeration on its economic growth. This paper thinks that in the process of the development of the city group, due to resource constraints, the manufacturing output unit of land demand big industry will gradually from the degree of economic development is relatively high in the whole city and the city to evacuate, inside, labor resources are gradually to the regional flow of high GDP per capita output.
The Relation Between Exports of Main Products And Economic Growth of Key Econ...inventionjournals
This paper clarifies the literature of key product export growth and regional economic growth. The paper analyses impacts of key product export on regional economic growth and vice versa. The paper provides recent empirical evidence of the relation. Besides an evaluation of the recent relation between export growth and economic growth in Viet Nam, the paper assesses the relation between key product export and economic growth during 1996-2012 period based on quantitative and qualitative approaches. With constructed models, the paper examines the relation between key product export and economic growth and concludes that it is positive. The research findings show that key product export in every economic region contributes positively to regional economic growth although it varies in different regions. Based on existing literature and empirical analysis, the paper provides a number of strategies to improve key product export contribution to key economic regions in the most effective manner and vice versa. The paper creates a fundament for researchers and policy makers both regionally and nationally in order for developing effective orientations, policies and measures for promoting export and sustainable eoconomic development.
Komonditi Export Mining Sector Analysis of Southeast Sulawesitheijes
The International Journal of Engineering & Science is aimed at providing a platform for researchers, engineers, scientists, or educators to publish their original research results, to exchange new ideas, to disseminate information in innovative designs, engineering experiences and technological skills. It is also the Journal's objective to promote engineering and technology education. All papers submitted to the Journal will be blind peer-reviewed. Only original articles will be published.
The paper proposes two econometric models of inflation for Azerbaijan: one based on monthly data and eclectic, another based on quarterly data and takes into account disequilibrium at the money market. Inflation regression based on monthly data showed that consumer prices dynamics is explained by money growth (the more money, the higher the inflation), exchange rate behaviour (appreciation drives disinflation), commodities price dynamics (“imported” inflation) and administrative changes in regulated prices. For the quarterly model, nominal money demand equation (with inflation, real non-oil GDP and nominal interest rate on foreign currency deposits as predictors) and money supply equation were estimated, and error-correction mechanism from money demand equation was included into inflation equation. It is shown that disequilibrium at the money market (supply higher than demand) drives inflation together with money supply growth and nominal exchange rate depreciation and administrative changes in prices. No cost-push variables appeared to be significant in this equation specification. Both models give similar inflation projections, but sudden changes in money demand (2012) lead to significant differences between the projections. It is shown that money is the most important inflation determinant that explains up to 97.8% of CPI growth between 2012 and 2015, and that in order to keep inflation under control the Central Bank of Azerbaijan should link money supply to real non-oil GDP growth.
Authored by: Alexander Chubrik, Przemyslaw Wozniak, Gulnar Hajiyeva
Published in 2012
The article describes the importance and relevance of macroeconomic modeling in the development of economic sectors. The problems of applying the methods of macroeconomic modeling both optimization and simulation in the practice of planning and managing the national economy are analyzed. Mukhitdinov Khudoyar Suyunovich | Juraev Farrukh Do’stmirzayevich "Methods of Macroeconomic Modeling" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Special Issue | International Research Development and Scientific Excellence in Academic Life , March 2021, URL: https://www.ijtsrd.com/papers/ijtsrd38498.pdf Paper Url: https://www.ijtsrd.com/economics/other/38498/methods-of-macroeconomic-modeling/mukhitdinov-khudoyar-suyunovich
This paper analyzes the distribution of real household incomes and consumption growth in Azerbaijan between 2004 and 2009. Decile-specific price deflators were used to calculate real incomes and consumption dynamics. The analysis, which was based on growth incidence curves, showed that economic growth between 2004 and 2009 was definitely propoor, both for real incomes and real consumption. Our results also indicate that household incomes were much more strongly correlated with oil GDP than with non-oil growth. Employment was the most important source of income growth for all deciles. Poorer households changed their coping strategies from subsistence agriculture to paid- and selfemployment. Although this led to a dynamic increase in their incomes, it hardly changed their consumption basket, with food still constituting more than 65% of spending. This means that their actual standard of living level did not change very much. Our results also indicate the low effectiveness and efficiency of social transfers; they were found to be almost evenly distributed among income deciles and played a negligible role in the income growth of the poorest households.
Authored by: Alexander Chubrik, Mateusz Walewski
Based on the data of Japanese Prime metropolitan area from 1955 to 2013, this paper studies the effect of industry agglomeration and population aggregation on economic growth in Tokyo metropolitan area. Through the processing of the panel data, we find that the industry agglomeration in Japanese Prime metropolitan region has apparently positive impacts on its economic growth, and also, population aggregation can positively effects its economic growth. Following this paper is try to carry out research on Tokyo —the core city of Japanese Prime metropolitan area, to study the influence of industry agglomeration on its economic growth. This paper thinks that in the process of the development of the city group, due to resource constraints, the manufacturing output unit of land demand big industry will gradually from the degree of economic development is relatively high in the whole city and the city to evacuate, inside, labor resources are gradually to the regional flow of high GDP per capita output.
The Relation Between Exports of Main Products And Economic Growth of Key Econ...inventionjournals
This paper clarifies the literature of key product export growth and regional economic growth. The paper analyses impacts of key product export on regional economic growth and vice versa. The paper provides recent empirical evidence of the relation. Besides an evaluation of the recent relation between export growth and economic growth in Viet Nam, the paper assesses the relation between key product export and economic growth during 1996-2012 period based on quantitative and qualitative approaches. With constructed models, the paper examines the relation between key product export and economic growth and concludes that it is positive. The research findings show that key product export in every economic region contributes positively to regional economic growth although it varies in different regions. Based on existing literature and empirical analysis, the paper provides a number of strategies to improve key product export contribution to key economic regions in the most effective manner and vice versa. The paper creates a fundament for researchers and policy makers both regionally and nationally in order for developing effective orientations, policies and measures for promoting export and sustainable eoconomic development.
Komonditi Export Mining Sector Analysis of Southeast Sulawesitheijes
The International Journal of Engineering & Science is aimed at providing a platform for researchers, engineers, scientists, or educators to publish their original research results, to exchange new ideas, to disseminate information in innovative designs, engineering experiences and technological skills. It is also the Journal's objective to promote engineering and technology education. All papers submitted to the Journal will be blind peer-reviewed. Only original articles will be published.
This paper provides a review of the empirical macroeconomic model (EMMA) built for forecasting purposes at the Finnish Labour Institute for Economic Research. The model is quite small, consisting of 71 endogenous and 70 exogenous variables. The number of behavioural equations is 15. The basis of the model is Keynesian, although the model has some novel properties. They are the treatment of the supply side and prices that follow the routes of the neoclassical synthesis. The parameters of the model are estimated from quarterly data that cover the years 1990–2005. The model also contains a Kalman-filtered variable to control the deep recession in Finland at the beginning of the ’90s. This special feature brings the model closer to the new calibrated models.
This paper aims to devise a monetary policy instrument rule that is suitable for open economies undergoing monetary convergence to a common currency area. The open-economy convergence-consistent Taylor rule is forward-looking, consistent with monetary framework based on inflation targeting, containing input variables that are relative to the corresponding variables in the common currency area. The policy rule is tested empirically for three inflation targeting countries converging to the euro, i.e. the Czech Republic, Poland and Hungary. Stability tests of the input variables affirm prudent inclusion of these variables in the suggested policy rule. Empirical tests of the proposed instrument rule point to systemic differences in monetary policies among these euro-candidates. The Czech inflation targeting is forwardlooking relying on a sensible balance between inflation and output growth objectives. Poland's policy focuses on backward-looking inflation, while the Hungarian policy on exchange rate stability. Forecasts of policy instruments based on the prescribed rule are more accurate and reliable for the Czech Republic and Hungary, but less for Poland.
Authored by: Lucjan T. Orlowski
Published in 2008
The aim of this paper is to provide a framework for the analysis of implications of various trade policy options for Albania. We study the impact of implementation of the Stablization and Association Agreement, free trade agreements with South-East European neighbors and reduction of the MFN tariffs. We employ a computable general equilibrium (CGE) model, which allows for evaluation of the likely impact of trade agreements on trade, output, factor rewards, tariff revenue and welfare. Our simulations indicate that Albania has a lot to gain from further integration with its neighbors and the EU. However, the benefits from regional integration can only be realized as long as Albania gains better access for its exports on regional markets. Liberalization of trade with all trading partners allows for a permanent increase of Albanian GDP by 1% on a recurring annual basis and an increase of wages by 3.4% relative to their 2000 level.
Authored by: Anna Kolesnichenko, Maryla Maliszewska
Published in 2004
The output gap indicating the difference between the actual and potential levels of output is a critical factor for estimating the inflationary pressures in an economy. If the main target of a central bank is ensuring and maintaining the price stability, estimating the output gap with a minimum error is crucial for the efficiency of the monetary policy. In this study, we estimated the output gap in Turkey for the 2002-2014 period by using four different methods. Two of these estimation methods are purely statistical (Linear Trend and Hodrick-Presscot (HP) Filtering) while the others are integrated with the relations suggested by the economic theory (multivariate structural model and structural autoregressive (SVAR) model). By using empirical decision criteria common in the literature, we conclude that SVAR model produces the most reliable output gap estimates to explain inflationary pressures in Turkey. However, we also found that the Hodrick-Presscot filtering method is the second best methodology in the output gap estimation process.
2 ijaems nov-2015-3-study on the relationship between tourism economy and eco...INFOGAIN PUBLICATION
With the rapid development of the tourism industry, the tourism industry in the national economy status is particularly important. This paper collects the relevant statistical data from 2013 to 1978 in Hunan Province, using regression analysis and variance analysis to study the relationship between regional tourism economy and economic growth. The results show that there is a high intensity of positive linear relationship between tourism economy and economic growth in Hunan Province, and the average level of GDP will increase by 972380000 yuan per 100000000 yuan.
An attempt is made to explore the basic implications of differences in productivity growth rates in countries within a monetary union and tailor them to the case of the EU new member countries running up to the EMU. By using the mathematical model of Harrod-Balassa-Samuelson effect and linking productivity and relative price dynamics with monetary policy, it is shown that: 1) productivity growth in faster-growing countries (FGC) leads to either inflation there, or union-wide exchange rate appreciation, or both in certain proportions, depending on the monetary policy stance taken by the union, but does not cause increase in inflation in slower-growing countries (SGC) by itself, unless the union’s monetary authorities take pro-inflationary policy; 2) because of presence of FGC, the SGC do not become less competitive in the world, and can benefit from increased export of their goods to FGC, provided their labour markets are flexible enough; 3) the real challenge for SGC posed by FGC is not inflation, but rather loss of jobs and export revenues, if their labour markets are not flexible enough to adjust under tight union-wide monetary policy aimed at keeping the union-wide overall price level unchanged, or the labour productivity increase in FGC is not met by adequate improvement in labour productivity in SGC. It should be noted, however, that this ‘adequate improvement’ is enough to constitute only a fraction of the productivity growth in FGC.
Authored by: Nikolai Zoubanov
Published in 2003
Az üzemanyagárak emelkedése miatt nagyot ugrott májusban az infláció, de a kereslet-vezérelt tételekben is érzékelhető a gyorsulás. Idén nyáron átmenetileg 3% feletti inflációra számítanak az OTP Bank elemzői. Tartósan 2019-ben érheti el a jegybank célját a pénzromlás üteme, sőt, ha a kockázatok realizálódnak, akár jelentősebb gyorsulás is jöhet jövőre.
In this paper, we analyze the demographic and economic consequences of endogenous migrations flows over the coming decades in a multi-regions overlapping generations general equilibrium model (INGENUE 2) in which the world is divided in ten regions. Our analysis offers a global perspective on the consequences of international migration flows. The value-added of the INGENUE 2 model is that it enables us to analyze the effects of international migration on both the destination and the origin regions. A further innovation of our analysis is that international migration is treated as endogenous.
In a first step, we estimate the determinants of migration in an econometric model. We show, in particular, that the income differential is one of the key variables explaining migration flows. In a second step, we endogenize migration flows in the INGENUE 2 model. In order to do so, we use the econometrically estimated relationships between demographic and income developments in the INGENUE model, which enables us to project long-run migration flows and to improve on projections of purely demographic models.
Authored by: Vladimir Borgy, Xavier Chojnicki, Gelles Le Garrec, Cyrille Schwellnus
Published in 2009
The paper studies labour developments in Moldova during transition period. The questions addressed are the size and character of labour market adjustment. Established data sources have been complemented by the results of available surveys to get more precise estimates of the effective employment. Wage data was adjusted for the stock of arrears. We conclude that adjustment to the new market order in Moldova has been done trough prices, which is similar to other FSU countries. Real wages, if adjusted for arrears, amount to only 14% of the pre-transition level. On the other hand, only small labour shedding is observed. Registered unemployment rate is one of the lowest in the FSU and CEE countries. Such way of adjustment has a number of negative consequences, the most important being the phenomenon of unpaid leaves. It appears, that only formal affiliation with enterprise remains, leaving those people effectively unemployed. Survey evidence report double-digit open unemployment rates, with widespread under-employment. With no system of unemployment benefits in place, a substantial number of labour force is involved in survival informal activities.
Authored by: Elena Jarocinska
Published in 2000
A piaci konszenzusnál erősebben, az OTP Bank Elemzési Központjának előrejelzésénél gyengébben alakult az első negyedéves GDP. Az adat megerősítette az OTP elemzőinek az idei év egészére vonatkozó 4%-os növekedési várakozását, a kockázatok felfelé mutatnak.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
In Central Asian countries the macroeconomic situation characterized by low level of public
investment. Peculiarities of transition economies led to greater complexity of the investment processes and
strengthened the factors opposing to IFDI.
National program for countering shadow economy in SerbiaNALED Serbia
On Wednesday, 23 December at the Palace of Serbia, the public was presented the National Program for Countering Shadow Economy, the first strategic document stipulating four groups of comprehensive measures for resolving one of the burning issues of domestic economy.
The program was designed by more than 100 representatives of public and private sector, civil society organizations and relevant experts. The document stipulates concrete measures and defining realistic goals for countering shadow economy.
This paper provides a review of the empirical macroeconomic model (EMMA) built for forecasting purposes at the Finnish Labour Institute for Economic Research. The model is quite small, consisting of 71 endogenous and 70 exogenous variables. The number of behavioural equations is 15. The basis of the model is Keynesian, although the model has some novel properties. They are the treatment of the supply side and prices that follow the routes of the neoclassical synthesis. The parameters of the model are estimated from quarterly data that cover the years 1990–2005. The model also contains a Kalman-filtered variable to control the deep recession in Finland at the beginning of the ’90s. This special feature brings the model closer to the new calibrated models.
This paper aims to devise a monetary policy instrument rule that is suitable for open economies undergoing monetary convergence to a common currency area. The open-economy convergence-consistent Taylor rule is forward-looking, consistent with monetary framework based on inflation targeting, containing input variables that are relative to the corresponding variables in the common currency area. The policy rule is tested empirically for three inflation targeting countries converging to the euro, i.e. the Czech Republic, Poland and Hungary. Stability tests of the input variables affirm prudent inclusion of these variables in the suggested policy rule. Empirical tests of the proposed instrument rule point to systemic differences in monetary policies among these euro-candidates. The Czech inflation targeting is forwardlooking relying on a sensible balance between inflation and output growth objectives. Poland's policy focuses on backward-looking inflation, while the Hungarian policy on exchange rate stability. Forecasts of policy instruments based on the prescribed rule are more accurate and reliable for the Czech Republic and Hungary, but less for Poland.
Authored by: Lucjan T. Orlowski
Published in 2008
The aim of this paper is to provide a framework for the analysis of implications of various trade policy options for Albania. We study the impact of implementation of the Stablization and Association Agreement, free trade agreements with South-East European neighbors and reduction of the MFN tariffs. We employ a computable general equilibrium (CGE) model, which allows for evaluation of the likely impact of trade agreements on trade, output, factor rewards, tariff revenue and welfare. Our simulations indicate that Albania has a lot to gain from further integration with its neighbors and the EU. However, the benefits from regional integration can only be realized as long as Albania gains better access for its exports on regional markets. Liberalization of trade with all trading partners allows for a permanent increase of Albanian GDP by 1% on a recurring annual basis and an increase of wages by 3.4% relative to their 2000 level.
Authored by: Anna Kolesnichenko, Maryla Maliszewska
Published in 2004
The output gap indicating the difference between the actual and potential levels of output is a critical factor for estimating the inflationary pressures in an economy. If the main target of a central bank is ensuring and maintaining the price stability, estimating the output gap with a minimum error is crucial for the efficiency of the monetary policy. In this study, we estimated the output gap in Turkey for the 2002-2014 period by using four different methods. Two of these estimation methods are purely statistical (Linear Trend and Hodrick-Presscot (HP) Filtering) while the others are integrated with the relations suggested by the economic theory (multivariate structural model and structural autoregressive (SVAR) model). By using empirical decision criteria common in the literature, we conclude that SVAR model produces the most reliable output gap estimates to explain inflationary pressures in Turkey. However, we also found that the Hodrick-Presscot filtering method is the second best methodology in the output gap estimation process.
2 ijaems nov-2015-3-study on the relationship between tourism economy and eco...INFOGAIN PUBLICATION
With the rapid development of the tourism industry, the tourism industry in the national economy status is particularly important. This paper collects the relevant statistical data from 2013 to 1978 in Hunan Province, using regression analysis and variance analysis to study the relationship between regional tourism economy and economic growth. The results show that there is a high intensity of positive linear relationship between tourism economy and economic growth in Hunan Province, and the average level of GDP will increase by 972380000 yuan per 100000000 yuan.
An attempt is made to explore the basic implications of differences in productivity growth rates in countries within a monetary union and tailor them to the case of the EU new member countries running up to the EMU. By using the mathematical model of Harrod-Balassa-Samuelson effect and linking productivity and relative price dynamics with monetary policy, it is shown that: 1) productivity growth in faster-growing countries (FGC) leads to either inflation there, or union-wide exchange rate appreciation, or both in certain proportions, depending on the monetary policy stance taken by the union, but does not cause increase in inflation in slower-growing countries (SGC) by itself, unless the union’s monetary authorities take pro-inflationary policy; 2) because of presence of FGC, the SGC do not become less competitive in the world, and can benefit from increased export of their goods to FGC, provided their labour markets are flexible enough; 3) the real challenge for SGC posed by FGC is not inflation, but rather loss of jobs and export revenues, if their labour markets are not flexible enough to adjust under tight union-wide monetary policy aimed at keeping the union-wide overall price level unchanged, or the labour productivity increase in FGC is not met by adequate improvement in labour productivity in SGC. It should be noted, however, that this ‘adequate improvement’ is enough to constitute only a fraction of the productivity growth in FGC.
Authored by: Nikolai Zoubanov
Published in 2003
Az üzemanyagárak emelkedése miatt nagyot ugrott májusban az infláció, de a kereslet-vezérelt tételekben is érzékelhető a gyorsulás. Idén nyáron átmenetileg 3% feletti inflációra számítanak az OTP Bank elemzői. Tartósan 2019-ben érheti el a jegybank célját a pénzromlás üteme, sőt, ha a kockázatok realizálódnak, akár jelentősebb gyorsulás is jöhet jövőre.
In this paper, we analyze the demographic and economic consequences of endogenous migrations flows over the coming decades in a multi-regions overlapping generations general equilibrium model (INGENUE 2) in which the world is divided in ten regions. Our analysis offers a global perspective on the consequences of international migration flows. The value-added of the INGENUE 2 model is that it enables us to analyze the effects of international migration on both the destination and the origin regions. A further innovation of our analysis is that international migration is treated as endogenous.
In a first step, we estimate the determinants of migration in an econometric model. We show, in particular, that the income differential is one of the key variables explaining migration flows. In a second step, we endogenize migration flows in the INGENUE 2 model. In order to do so, we use the econometrically estimated relationships between demographic and income developments in the INGENUE model, which enables us to project long-run migration flows and to improve on projections of purely demographic models.
Authored by: Vladimir Borgy, Xavier Chojnicki, Gelles Le Garrec, Cyrille Schwellnus
Published in 2009
The paper studies labour developments in Moldova during transition period. The questions addressed are the size and character of labour market adjustment. Established data sources have been complemented by the results of available surveys to get more precise estimates of the effective employment. Wage data was adjusted for the stock of arrears. We conclude that adjustment to the new market order in Moldova has been done trough prices, which is similar to other FSU countries. Real wages, if adjusted for arrears, amount to only 14% of the pre-transition level. On the other hand, only small labour shedding is observed. Registered unemployment rate is one of the lowest in the FSU and CEE countries. Such way of adjustment has a number of negative consequences, the most important being the phenomenon of unpaid leaves. It appears, that only formal affiliation with enterprise remains, leaving those people effectively unemployed. Survey evidence report double-digit open unemployment rates, with widespread under-employment. With no system of unemployment benefits in place, a substantial number of labour force is involved in survival informal activities.
Authored by: Elena Jarocinska
Published in 2000
A piaci konszenzusnál erősebben, az OTP Bank Elemzési Központjának előrejelzésénél gyengébben alakult az első negyedéves GDP. Az adat megerősítette az OTP elemzőinek az idei év egészére vonatkozó 4%-os növekedési várakozását, a kockázatok felfelé mutatnak.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
In Central Asian countries the macroeconomic situation characterized by low level of public
investment. Peculiarities of transition economies led to greater complexity of the investment processes and
strengthened the factors opposing to IFDI.
National program for countering shadow economy in SerbiaNALED Serbia
On Wednesday, 23 December at the Palace of Serbia, the public was presented the National Program for Countering Shadow Economy, the first strategic document stipulating four groups of comprehensive measures for resolving one of the burning issues of domestic economy.
The program was designed by more than 100 representatives of public and private sector, civil society organizations and relevant experts. The document stipulates concrete measures and defining realistic goals for countering shadow economy.
Sustainable development of the regions is presently an often discussed theme, mainly due to the worldwide situation. The goal of the contribution is therefore to find regions in Slovakia and Ukraine that have the possibility to have mutually advantageous ways of cooperation. The selection of the regions results from the comparison of European Union (EU) Member State’s situations and not EU Member State situations. The situation in the regions is compared according to the regional gross domestic product per capita, the unemployment rate in the region and the average monthly wage of employees in the regions. The results of the contribution show possible cooperation of the analyzed regions in business, mainly in the area of industrial production, with unemployment decreasing. The use of the results is in the area of finding strategies for improvement and cooperation.
The objective of this paper is to examine the impact of financial market development and liberalization on money demand behavior in Central African Economic and Monetary Community (CEMAC). We adopt the generalized method of moments (GMM) system for panel data. The empirical results indicate that financial liberalization has a negative impact on money demand. Moreover, real GDP and the GDP deflator affect it positively, while the main policy rate has a negative impact. In terms of economic policy involvement, monetary authorities must pursue reforms aimed at deepening financial liberalization measures so that banks actively participate in the financing of CEMAC economies.
Monetary approach to balance of payment establishes a link between foreign reserve assets and money supply. This
link is important for managing balance of payment disequilibrium through adjustment of monetary aggregates. This
study relies on the (Polak, 1957;1997) monetary model with data from 2007:Q1 to 2018:Q4 to examine the link
between monetary factors and balance of payment in Nigeria. To circumvent simultaneity, the reduced form
coefficients of the structural form of the Polak model are estimated using Two Stage Least Squares (TSLS)
technique, while the structural parameters are recovered from the estimated reduced form coefficients. The results
are enriching and robust. The Johansen cointegration procedure suggests a long run relationship among the
macroeconomic variables in the balance of payment function. The estimated balance of payment model reveals that
domestic credit is statistically significant and negatively related to foreign reserve assets, imp lying that balance of
payment is a monetary phenomenon in Nigeria. The velocity of money circulation and the marginal propensity to
import are approximately 120 per cent and 14 per cent, respectively. The study therefore recommends that the
monetary authority should consider the use of domestic credit for management of balance of payment
disequilibrium. It is also pertinent to increase domestic credit to grow the economy since such action will marginally
decrease external reserve assets through increase in import, however, the net effect will enhance the overall
economy.
Degree of economic_freedom_and_relationship_to_economic_growthAnochi.com.
Freedom is an intrinsic element of the life of every person, yet is often noticed only
in the event that attempts are made at limiting it. It is possible today to select many
areas in which it is more or less consciously diminished. One of these is the field of
economic freedom, which may be reduced through bureaucracy for example, as well as
through various forms of concession. The means of preventing this particular
weakening of the development of an economy may be a gradual liberalization of it.
Individuals aspire to gain happiness through the fulfillment of their needs, assistance
in which may be provided by an increase in income. Economic growth triggers an
increase in the income of individuals, but is also equated with an increase in access to
such goods as better medical care or education. On account of this it becomes vital to
investigate the influence of the liberalization of an economy on economic growth
Financial Diagnosis of the „Baia Mare Art Center” County Art Museuminventionjournals
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How to get verified on Coinbase Account?_.docxBuy bitget
t's important to note that buying verified Coinbase accounts is not recommended and may violate Coinbase's terms of service. Instead of searching to "buy verified Coinbase accounts," follow the proper steps to verify your own account to ensure compliance and security.
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The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
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Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
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Currently there are no website or exchange that allow buying or selling of pi coins..
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A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
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Exploring Abhay Bhutada’s Views After Poonawalla Fincorp’s Collaboration With...beulahfernandes8
The financial landscape in India has witnessed a significant development with the recent collaboration between Poonawalla Fincorp and IndusInd Bank.
The launch of the co-branded credit card, the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card, marks a major milestone for both entities.
This strategic move aims to redefine and elevate the banking experience for customers.
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What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
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A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
Poonawalla Fincorp and IndusInd Bank Introduce New Co-Branded Credit Cardnickysharmasucks
The unveiling of the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card marks a notable milestone in the Indian financial landscape, showcasing a successful partnership between two leading institutions, Poonawalla Fincorp and IndusInd Bank. This co-branded credit card not only offers users a plethora of benefits but also reflects a commitment to innovation and adaptation. With a focus on providing value-driven and customer-centric solutions, this launch represents more than just a new product—it signifies a step towards redefining the banking experience for millions. Promising convenience, rewards, and a touch of luxury in everyday financial transactions, this collaboration aims to cater to the evolving needs of customers and set new standards in the industry.
Poonawalla Fincorp and IndusInd Bank Introduce New Co-Branded Credit Card
Ssrn id3103392
1. Electronic copy available at: https://ssrn.com/abstract=3103392
The Shadow Economy in
Azerbaijan: Size and Causes
N o r w e g i a n I n s t i t u t e o f
I n t e r n a t i o n a l A f f a i r s ( N U P I )
R e g i o n a l C o m p e t e n c e -
B u i l d i n g f o r T h i n k - T a n k s i n
t h e S o u t h C a u c a s u s a n d
C e n t r a l A s i a
2 0 1 2 [ 2 0 1 1 ]
Gubad Bayramov
Economic Research Center
Azerbaijan
3. 1
Gubad Bayramov
Economic Research Center
The Shadow Economy in Azerbaijan: Size and Causes
Abstract: Since the collapse of the Soviet Union, the transition economies of the
Commonwealth of Independent States (CIS) have kept one of the negative features of the
Soviet economy – the informal sector. Despite the shift from command to market economy,
the informal sector has proved remarkably persistent, with significant ramifications for
policies in areas as diverse as social welfare, taxation and business development. In
considering the social and policy impact of illegal activities stemming from the informal
economy, it is very important to have accurate and up-to-date information, not only on its
size, but also on its nature, distribution, causes and functions. This research paper aims to
supply this information and to suggest policy measures to combat the shadow economy in
today’s Azerbaijan. This research therefore has the following two specific objectives: To
determine the present size of the shadow economy in Azerbaijan and to determine its nature
and cause.
Keywords: Azerbaijan, informal sector, shadow economy, cash money, mirror statistics,
unofficial imports
4. 2
Policy context of the problem
In 2011, the GDP volume produced in Azerbaijan increased by 0.1% compared with the
previous year, amounting to 50.1 billion AZN, while the volume of per-capita GDP totaled
70,034 USD (State Statistics Committees, January 2012). The current circumstance of the
Azerbaijani economy, of a large but temporary oil production boom, necessitates a validation
of the shadow economy. However, any policy suggestions to this end depend first and
foremost on a correct estimate of the shadow economy’s real size and causes. Therefore, this
research attempts to provide an estimate of the fraction of the shadow economy in the GDP,
and to this end, various methods are employed to determine the shadow economy’s level in
Azerbaijan. This research determines the shadow economy and its real limits and looks into
the reasons for its existence, as well as methods for its legalization. This paper also deals with
the losses incurred by the official economy as a result of shadow economy.
The inherent difficulty in measuring unofficial activities, compounded by the reluctance of
many government agencies to acknowledge their importance, has led to the relative neglect of
the unofficial economy. However, among the states of the former Soviet Union (FSU) and
Eastern Europe, its importance is increasingly evident. Azerbaijan’s economy is heavily
dependent on a single resource (petroleum), showing signs of Dutch Disease, where a highly
capital-intensive enclave export sector inhibits the non-oil economy from developing.
Considering the instability in the world oil market and the low capacity of the domestic oil
sector to generate employment, the non-oil economy is vital for ensuring stable growth in
Azerbaijan. Even though the Household Living Standard Measurement Study (LSMS 2010)
shows that the poverty rate fell from over 30 percent in 2005 to 15 percent in 2009 and the
Gini inequality index declined by 8 percent to 34 percent, the official unemployment rate fell
by only 3 percent during this period, raising doubts about the quality of these statistics as well
as the definition of employment.
According to some experts, the informal sector in Azerbaijan accounted for 67.9 percent of
GDP in 2007 (Schneider et al. 2010: 26-29). With the exception of Georgia, this makes it the
largest shadow economy of the former Soviet Union (FSU). The scale of the informal sector,
when combined with the importance of developing the non-oil economy for long-term
stability in Azerbaijan, makes understanding the shadow economy an essential task for
economists and policy makers. Without systematic treatment of the unofficial economy, it is
also impossible to form effective policy in areas such as social protection and taxation. Policy
5. 3
makers in Azerbaijan have yet to address the shadow economy this research project aims to
begin this process.
The practical contribution of this research
In 1998, the State Statistics Committee started to provide annual quantitative estimates of the
shadow economy in Azerbaijan, adding the results obtained to official macroeconomic
parameters. In order to enhance the quality of these quantitative estimates, a special section
within the State Statistics Committee was established, but as seen from the estimates supplied
so far, these statistics are based on a structural method, i.e. one that engages with the value of
the shadow economy by using a method to identify sectors based on shadow economy theory.
We consider that in order to improve the practice of quantitatively estimating the shadow
economy in our country, we should extend the research conducted in this area, especially the
widely applied quantitative estimate methods used in other parts of the word – with the
monetary approach method chief among them.
Figure 1. The extent of the shadow economy in Azerbaijan based on the quantitative
estimation method (per cent in GDP)
Source: State Statistical Committee of Azerbaijan.
Literature review
Two things are worth noting about the economic literature on the shadow economy. First, this
literature is mostly concerned with estimating the size of the shadow economy rather than
analyzing its causes. Therefore, it usually hypothesizes causal variables instead of trying to
19,5%
22,7%
19,2%
20,7% 19,7%
16,7%
13,9%
9,2% 9,0% 9,0%
9,0%
0%
5%
10%
15%
20%
25%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Shadow economy
6. 4
discover the country-specific issues. This could also lead to some variables being defined as
causal in the appearance of the shadow economy when they are in fact outcomes of the
shadow economy (see Schneider, Buehn & Montenegro (2010) for more discussion).
Second, there is some confusion concerning which definition of shadow economy is more
accurate and can be best tested empirically. The most comprehensive definition of the shadow
economy is given by Schneider & Enste (2002) who divide the national economy into two
parts: formal and underground. In turn, they define the shadow economy as one of two parts
of the underground economy – the other being the household economy. Therefore, the shadow
economy includes illegal activities with the final marketable product being both legal and
illegal (ordinary goods produced illegally and prohibited production). This definition is more
testable because it involves market operations which leave at least some traces in the official
sector.
Methodology
This project employed quantitative and qualitative research methods designed to gather and
analyze data related to the research objectives presented above. These methods are designed
to complement each other, allowing for multiple perspectives on the same processes that can
then be compared and contrasted later. Quantitative methods are useful for measuring the size
and distribution of the shadow economy, but cannot account for the causes and functions of
the shadow economy alone. For this reason social anthropological methods were also
employed to elicit new data and refine understanding of the causes and functions of the
shadow economy. Qualitative methods were also be used to test the extent to which certain
variables influence participation in the shadow economy and therefore assist in the
identification of appropriate policy instruments. This research used the following empirical
models and qualitative tools:
The currency ratio method
Based on estimates of the amount of cash circulating in the shadow economy, the
methodology proposed by Peter Guttmann (1999) – the author of one monetary approach
method – enables a quantitative estimation of the shadow economy’s scale. The principal
theoretical proposition of this method advanced by Guttmann is that disposable funds are
mainly used in shadow economy transactions. At the same time, as non-monetary assets are
not used in settlements, the ‘cash money/called-up savings’ relationship may appear as an
7. 5
indicator of the shadow economy’s scale. If the shadow economy does not exist, this
relationship will be stable over the course of time. Alternatively, if this relationship is
increased in duration, it means that the demand for cash funds has been enhanced and this is
evidence of a growing shadow economy. The other hypotheses of the aforementioned method
include:
The velocity of money turnover calculated according to the correlation between the
gross domestic product (Yr) and money stock in turnover is equal to each other, both
in the public and the shadow sector (Vr = Vg)
The settlement unit in the shadow economy is cash funds (C). The amount of cash
funds in the turnover (C) is equal to the total of the cash funds used both in the
official (Cr) and the shadow economy (Cg) (C = Cr+Cg)
The proportion of the cash funds in the turnover to the called-up savings (D1)
remains stable within the period when shadow economy transactions were not made
(C/D=k). The increase of k is evidence of a growing shadow economy
A ‘reference year’ includes those years with no shadow economic activity or when
there is an insufficient level of activity and this is taken as a base. It is accepted as
the year when the price for k is lowest. It will be C/D = Cr/D in a year.
So, the quantitative estimation of the shadow economy is implemented in the following
succession, based on the above mentioned hypotheses:
The C/D relationship during some periods (k) is calculated and one of them is chosen
as a ‘reference year’
The C/D relationship in the ‘reference year’ (ko) being multiplied by the amount of
the called-up deposit (D), the cash fund stock used in the economy is calculated for
the current year (Cr)
The circulating cash funds from the current year being deducted, the money stock
circulating in the shadow economy is calculated for the current year (Cg = C-Cr)
In the current year, the official gross domestic product parameter (Yr) being divided
into the money stock M1, the money circulating velocity in the official economy is
calculated (V=Yr/(e+D)
8. 6
Taking into account that the money circulation velocity is the same in both the
official and shadow sectors, the cash fund stock circulating in the shadow economy
(Cg) being multiplied by the money’s circulating velocity (V), the gross domestic
product in the shadow economy is calculated (Yg).
Figure 2. The quantitative estimation of the shadow economy
C - koD C- koD
Yg = Yr --------------------- = Yr -------------------
M1 C + D
‘Mirror Statistics’ from foreign trade indicators
This study examines the characteristics of Azerbaijan’s foreign trade and the data on
Azerbaijan’s trade with 16 partner countries, as calculated by both the Azerbaijani and the
counterpart’s side. An extended data base was created from the information provided by both
Azerbaijan and its trade partners. We believe that this research will become a respected source
of reference during the decision-making process on state regulation of foreign trade,
particularly when identifying the problems of implementing foreign trade.
Thus, the database for this research consists of customs statistics from the Republic of
Azerbaijan, statistics from the State Statistical Committee on foreign trade, payment balances
from the Central Bank and official statistics from foreign countries on export-import
operations with Azerbaijan. Using the ‘mirror statistics’ methodology, the State Statistical
Committee data was compared with the same-period information on trade with Azerbaijan
from partner countries. The calculation model based on this methodology allowed for a
definition of the amount of unregistered products imported and exported within a certain
period.
As for these estimates, which are not unanimously recognized, we can say that none of them
appeared as a result of research specifically directed at Azerbaijan. In other words, these
estimates do not take the realty of Azerbaijan into account. These calculations are based on
general principals and methods applicable to the investigated country groups. It is possible to
obtain different results thanks to this research, which takes this reality into consideration.
9. 7
This research was conducted based on the two aforementioned methodologies (the ‘currency
ratio method’ and ‘mirror statistics’ on Foreign Trade Indicators.). The first of them is the
currency ratio method and we have attempted to make this estimate according to the Peter
Gutmann method that has so far not been used to estimate Azerbaijan’s shadow economy.
According to this methodology, we may analyze the results obtained as a result of a
calculation of the k=C/D relationship (annual and monthly) during 1991-2006. It becomes
obvious that the lowest level of k in Azerbaijan was in 1992, when k was equal to 0.8 – in
other years, the price for k was not lower than 0.8. At the same time, and as shown in Table 2,
the relationship C/D reduced sharply in 1992, then increased 1992-2002 and decreased again
2003-2006 and again increased 2007-2011. Despite the fact that from 1992 onwards the
financial and banking sectors were sufficiently developed and non-cash payments were
widened and monetary policy mechanisms completely realized, the relationship C/D is
continually higher than that observed at the beginning of the 1990s and in developed countries
in general. This gives grounds for thinking about the existence of the shadow economy
phenomenon in the country.
Table 1. The results of the correlation of the cash money method (Gutmann) for Azerbaijan’s
shadow economy (‘Basic year’ = 1992, coof = 0.80)
Date
C
(mln.
AZN)
(M0)
D
(mln.
AZN)
k=C/D Ko∙D C+D
(M1)
Yr
Official
GDP
(mln.
AZN)
Yg
Shadow
GDP
(mln.
AZN)
Shadow
economy
(the share
of the
official
GDP)
01.01.1992 0.6 0.1 6.00 0.08 0.7 0.54 0.4 74.2%
01.01.1993 0.8 1.0 0.80 0.80 1.8 4.8 0 0%
01.01.1994 7.7 6.1 1.26 4.88 13.8 31.4 6.4 20.4%
01.01.1995 55.2 25.0 2.20 20.00 80.2 374.6 164.4 43.8%
01.01.1996 120.4 64.5 1.86 51.60 184.9 2133.8 793.9 37.2%
01.01.1997 173.0 61.6 2.80 49.28 234.6 2732.6 1441.0 52.7%
01.01.1998 234.1 73.4 3.18 58.72 307.5 3158.2 1801.2 57.0%
01.01.1999 185.2 55.3 3.34 44.24 240.5 3440.6 2016.5 58.6%
01.01.2000 227.1 50.8 4.47 40.64 277.9 3775.0 2532.8 67.0%
10. 8
01.01.2001 269.9 45.5 5.93 36.40 315.4 4718.2 3493.0 74.0%
01.01.2002 293.,8 43.7 6.72 34.96 337.5 5315.6 4076.7 76.6%
01.01.2003 333.7 59.7 5.58 47.76 393.4 6062.5 4406.4 72.6%
01.01.2004 408.1 91.6 4.45 73.28 499.7 7146.5 4788.4 67.0%
01.01.2005 477.8 179.5 2.66 143.60 657.3 8530.2 4337.1 50.8%
01.01.2006 547.4 200.4 2.73 160.32 747.8 11875.6 6147.1 51.7%
01.01.2007 1311.3 542.3 2.41 433.84 1853.6 17735.8 8395.8 47.3%
01.01.2008 2713.5 939.2 2.89 751.36 3652.7 26815.1 14212.0 53.0%
01.01.2009 4145.7 999.3 4.15 799.44 5145.0 40137.2 26104.9 65.0%
01.01.2010 4174.8 1065.0 3.92 852.00 5239.8 34578.7 21954.4 63.4%
01.01.2011 5455.8 1263.1 4.31 1010.5 6718.9 41574.7 27506.3 66.2%
According to the Guttmann method, we recognize the year 1992 as the ‘base year’ and the
C/D relationship in that year as the ‘normal parameter’. Although the supposition surrounding
the shadow economy in the country in 1992 is not a proposition accepted easily, the
hypothesis presented for Armenia by Tunyan (2005) may be advanced for Azerbaijan too. So,
beginning from August 15, 1992, the manat was put into circulation and by the end of the
year the substation of the rouble was largely accomplished. Therefore, we can accept that the
end of 1992 was the time when cash funds were circulating in the shadow economy to a lesser
degree. At the same time, we have to take into account that, besides the process of converting
the rouble to manat, the US dollar was not as common in this period as an alternative payment
means. So, taking 1992 as the ‘base year’, we are able to quantitatively estimate Azerbaijan’s
shadow economy.
As seen in Table 1, the specific weight of the shadow economy has demonstrated a
progressive tendency in the national gross product up to 2003 and only after 2003 did it start
to regress. But we have to note that despite the contraction of the shadow economy’s specific
weight since 2003, its physical volume and per capita indices of cash funds circulating in the
shadow economy have gained ground.
The second method is the ‘Mirror statistics’ from foreign trade indicators. Calculations
revealed variations of an independent character and volume in the trade operations of 16
countries involved in this research. The differences between the two (external and internal)
sources of import operations over the last 7 years are presented in the Table 2 below.
11. 9
Table 2. Non-registered turnover with 16 countries, 2003-2009 (Million USD)1
Source: The Azerbaijani State Statistical Committee and official statistics from foreign countries on export-
import operations with Azerbaijan.
Export – Exports from these countries to Azerbaijan
Import – Officially registered imports of commodities sent from these countries to Azerbaijan
Total export – Total exports from these countries to Azerbaijan
Total import – Annual amount of the registered official import to Azerbaijan
K – Annual variation of the researched countries
K = Total Exports, Total Imports (in countries)
OI – Official Imports (Annual official imports in Azerbaijan)
The first column of the table indicates the country analyzed, the second column shows official
statistical data on exports to Azerbaijan, the third column reflects official data from the State
1
Note: The table below explains the situation for 2003-2009.
Country Exports Imports Discrepancy =
Exports – Imports
Discrepancy
/Exports
Discrepancy
/Imports
Discrepancy/
(Exports +
Imports)
Russia 8099 6277.4 1821.6 22.5 29.0 12.7
Turkey 6416,6 3455.8 2960.8 46.1 85.7 30.0
Georgia 727 293.7 433.3 59.6 147.5 42.5
Ukraine 3159.1 2377.5 781.6 24.7 32.9 14.1
USA 1280.9 1404.1 -123.2 9.6 8.8 4.6
Japan 588 1170.3 -582.3 -99.0 -49.8 -33.1
United
Kingdom
2858.8 2619 239.8 8.4 9.2 4.4
Kazakhstan 1375.3 1084 291.3 21.2 26.9 11.8
Iran 2244.4 539.2 1705.2 76.0 316.2 61.3
Italy 1551.7 857 694.7 44.8 81.1 28.8
South Korea 644 507.7 13.3 21.2 26.8 11.8
Israel 517.6 235.6 282 54.5 119.7 37.4
Germany 3641.2 2650.7 990.5 27.20 37.37 15.74
Belarus 398.2 359.3 38.9 9.8 10.8 5.1
China 2642.8 1876.4 766.4 29.0 40.8 17.0
Hungary 272.1 61 211.1 77.6 346.1 63.4
12. 10
Statistical Committee on Azerbaijan’s imports from foreign countries, the fourth column
illustrates variations between the data (+ increases in comparison with indicators supplied by
the State Statistical Committee of Azerbaijan - decreases in comparison with indicators
supplied by the State Statistical Committee of Azerbaijan), the fifth column shows variation
(K) against the distribution of exports by Azerbaijan (based on information from partner
countries), and the sixth column illustrates the distribution of variation (K) of Azerbaijan’s
imports from foreign countries (based on SSC information. Finally, the seventh column
presents the distribution of the variation (K) to the sum of exports and imports in Azerbaijan.
Thus the fourth column gives information on yearly variations and total variation (in absolute
terms), the fifth, sixth and seventh columns give information on special net variation among
specific indicators (in exports to Azerbaijan, in the imports of Azerbaijan, the sum of exports
and imports).
According to the data from the countries involved in the research, the greatest variation,
especially with import operations, was recorded with Turkey (2960.8 billion USD), Russia
(1821.6 million USD) and Germany (990.5 million USD). Meanwhile, the most important
point in the table is that the difference between the import statistics in Azerbaijan and the
export statistics from the United States and Japan is favorable for the United States. It is likely
that this difference results from the HPS operations of these countries.
2003-2009 represents the main period for analysis. During 2003-2009, the variation totaled 10
billion, 645 million, 900 USD among the 16 countries. To go into detail, the confidential
circulation assumed for the efficiency counted for each year was revealed. Afterwards, the
share for each of the 16 countries was found in the imports officially declared by the State
Statistical Committee. It was discovered that these indicators were 67.7% in 2003, 69.2% in
2004, 63.4% in 2005, 73% in 2007, 79.9% in 2008 and 80% in 2009. This study discloses that
confidential imports total more than 14 billion, 200 million USD.
Figure 3. Method of Calculation
AV= OI / OIN
Here,
AV - Assumed variation
Oİ - official import
OIN - official import net
13. 11
To calculate the official import net, total imports indicated in Azerbaijani sources needs to be
divided by official imports.
OIN= Total import / OI
During 2003-2009, the general variation for each separate import operation and its share in
the overall imports of 16 countries are represented in Table 3 below.
Table 3. Variations for separate import operations, 2003-2009
Year Exports
(million)
Imports (A)
(million)
Discrepancy
(million)
Ratio of discrepancy
in imports (%)
2003 2283.7 1779.3 504.4 28.3
2004 3254.9 2434.5 820.4 33.7
2005 3780.8 2670.3 1110.5 41.6
2006 5089.3 3843.6 1245.7 32.4
2007 6662.1 4563.5 2098.6 46.0
2008 8635.2 5582.8 3052.4 54.7
2009 6710.7 4896.8 1813.9 37.0
Total 36416.7 25770.8 10645.9 41.3
Source: State Statistical Committee of Azerbaijan and official statistics from foreign countries on export-import
operations with Azerbaijan
As noted in the second column of the table, the greatest variations were recorded in 2008.
Thus, during this year, the variation in the import operation with 16 countries was 3 billion,
52 million, 400 USD and this constituted 43 per cent of imports officially declared by the
State Statistical Committee. That was 54.7 per cent of the imports from 16 countries. The last
column of the table shows that there were variations of 28.3% and 54.7% in the official
statistics of Azerbaijan.
As we noted in the introduction, according to the mirror statistics methodology, when the
difference between the countries’ statistics in the same period is less than 10%, it does not
cause doubt. Calculations on the basis of bilateral information show that, during 2003-2009,
this difference was on average 41.3%. This is 4 times greater than the norm. Trend analysis
demonstrates that the dynamic of increasing hidden imports, which started in 2003, has
decreased since 2009. This can be explained by a 15% decrease in imports into Azerbaijan in
2009 compared to 2008, due to the effects of the global financial crisis.
14. 12
This study, using the interstate mirror method for the period in question, shows that the
variation among 16 countries in import statistics during 2003-2009 constituted 10 billion, 645
million, 900 USD. The difference between exports from Azerbaijan and imports from the 16
countries to Azerbaijan was not particularly large and the trend in recent years has been a
downward one. However, the increasing difference between the exports of partner countries
to Azerbaijan and Azerbaijan’s imports does imply widespread corruption, monopolization,
double invoicing, avoidance of registration and violation of transparency procedures.
This study demonstrates that, when calculations are made in accordance with the mirror
method, it is important to consider the structure of products. Calculation schemes that focus
on food products are based on indirect information from internal statistics, regulated by the
retail sources of both the exported products and products produced in the country. The
application of the aforementioned mirror method to the issue of discrepancy between
intermediate and investment products might create problems in obtaining correct results.
Thus, a ‘utilization resources’ table is prepared for this group of products based on complex
statistical methodology and a list of unregistered goods. In this case, the evaluation of non-
consumption imports is based on mirror statistics from the previous year.
This research is not presented with the purpose of providing quality to the revealed
contradictions. But the fact that mirror difference does not exist during trade operations
among countries cannot be denied. Simply put, the main issue here is the relevance of the
revealed difference in the operational shares of import operations during the period of
analysis. The average volume of the share of the revealed difference in import operations is
41.3 per cent for 2003-2009. This is 4 times more than the norm.
Main findings
As this research has proved, despite the various methodological approaches relating to the
determination of the shadow economy, the results obtained as a result of their application in
Azerbaijan confirm, once again, the large scale of the shadow economy. Estimating
Azerbaijan’s shadow economy using the Peter Gutmann method shows that, in 2010, it
comprised 66.2% of official GDP. We must note that estimations using this method are
common in most countries, but it does have a number of drawbacks too. The most important
drawback that arises from its application to transition countries, such as Azerbaijan, is the
15. 13
assumption that the expanding hidden economy is a unique cause of the increment in the C/D
relation. As Hanousek and Palda (2004) showed, the shadow economy is not the only factor
in the C/D relation in these countries. Other factors include failures in the banking sector,
premature innovation in the finance system, unstable levels of economic growth and inflation,
directing the population to cash money as a result of a crisis or negative interest rates, and the
changing of legislation in the banking sector. From this point of view, we consider it
necessary to take these factors into account for future estimations of the shadow economy in
the Azerbaijan Republic, with the purpose of increasing the quality of estimates using the
monetary approach.
This research is based on mirror statistics of foreign trade and the findings indicate a
difference in import operations between Azerbaijan and its 16 major trade partner countries to
the amount of 10.6 billion USD for the period of 2003-2009. According to the mirror statistics
method, differences in same-period statistical information between countries do not cause any
debate when it is below 10%. Thus, according to international methodology, imports
exceeding exports by 10% is deemed normal. However, when imports exceed exports by
more than 10%, assumptions about other trade barriers and corruption are stipulated.
Policy recommendations
Analysis of various reasons for the appearance and development of the shadow economy in
Azerbaijan indicates the domination of the oil sector in the economy, and its leading role is
one of the main reasons for the degradation of indices in this field. Therefore, conducting
reforms aimed at liberalizing the Azerbaijani economy and declaring a financial amnesty are
very important. This is made even more necessary by the new economic environment that
sees oil output slowly decreasing. Additionally, the integration of domestic accounting and
audit standards into International Financial Reporting Standards will pave the way for making
the financial reporting system more transparent and traceable in Azerbaijan. Furthermore,
improving and increasing the usage of non-cash methods in all trade transactions will help to
decrease the actual size of the shadow economy. As the analysis of international trade
transactions in the light of mirror statistics shows, increasing transparency in customs
procedures is vital and the development of e-government and the application of electronic
systems in customs can assist in decreasing the size of the shadow economy in Azerbaijan.
Finally, instilling a social consciousness intolerant of the shadow economy is also very
important.
16. 14
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