CEU eTD Collection
A Inpartialrequirementofthe fulfillmentfor in ofdegree Master the ofArts NALYSIS AND ESTIMATI AND NALYSIS EconomicPolicy on Supervisor: Professor AttilaSupervisor: Ratfai CentralUniversity European Department ofEconomics IN JamilaMammadova Budapes A Submitted Submitted to ZERBAIJAN ON OF THE REGIONAL P REGIONAL THE OF ON 2013 By t, Hungary t,
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CEU eTD Collection Keywords advancement approach policymaker government. the by considered be to needs which development, regional for potential inregions reconsidered largewhereasand stronge the in estimated are which of effectiveness the enterprises; policy estimation
st The research analyzes the ongoing regional policy in Azerbaijan and Azerbaijan in policy regional ongoing the analyzes research The f h country the of
, effect o effect
. : regional development, regional regional: development, policy,
of of At the samethetime,a At mrvmn o te ntttoa framework institutional the of improvement s shall consider diversification of the regional policy, like introduction of program program of introduction like policy, regional the of diversification consider shall s . .
its effectiveness for effectiveness its The other importantfind The other f
mediumconstructional the regionalthe
r cntutoa ivsmns n spot f ml ad medium and small of support and investments constructional are n establishment of higher educational entities in regions has a high high hasa ofin higher regionsneducational entities establishment tools
the regional development. The most used tools used most The development. regional the
is achieved by the support of small and medium enterprises, enterprises, medium smalland of support the by achievedis ing is that the regional policy does not affectreal the wage not does thepolicy is regional ing that A investments are the leasteffective investmentsthe are BSTRACT i
regionali
, and investments in technological technological in investments and , nequality thesis .
The results show that the the that show results
ones, ones, conducts the OLS OLS the conducts in and need to be needto and
the regional regional the Also, the Also,
CEU eTD Collection people an me study giving to opportunity for CEU to gratitude warm my express like also would I research. the during without whom mywithout I would like to thank to like would I
here . education
I would also like to express to like also would I
my supervisor, Professor Attila Ratfai, for his important advices important his for Ratfai, Attila Professor supervisor, my A
would be impossible.bewould CKNOWLEDGEMENTS ii
deepest thanks to my parents parents my to thanks deepest
and close close and
CEU eTD Collection B A A P C C C C I of Table NTRODUCTION OLICY IMPLICATIONS A IBLIOGRAPHY HAPTER HAPTER HAPTER HAPTER PPENDIX PPENDIX 4.3. Theresults4.3. of estimation The4.2. DataDescription4.1. mainThe3.3. regionalofinthe characteristic Azerbaijan policy stateTheprograms other 3.2. announcedby country the 2009 for ProgramState 3.1. Socioon Regional2.2. inpracticeand policy theory Regional2.1. ininequalityempiricsand theory 1.3. 1.2. 1.1.
Measurement of inequalityofMeasurement itsdynamics and Economic,structural, andsocial, differencesdemographic among regions the Economicregional division 2. 1. 4. 3. 2 1 - C methodologymodel and the 2013 years2013
E R R O ...... ONTENTS STIMATION OF THE MOD EGIONAL POLICY IN EVIEW OF THELITERAT VERVIEW OF REGIONAL
......
......
ND CONCLUSIONS ......
- Economic RepublicDevelopment oftheAzerbaijan Regions of of
...... A ZERBAIJAN URE ON REGIONALURE ON INEQ ......
...... EL INEQUALITY IN
......
......
......
...... iii ......
A ......
...... ZERBAIJAN ......
...... UALITY ......
......
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64 60 57 52 48 47 44 41 38 37 30 29 23 19 19 16 8 7 6 2
CEU eTD Collection OLS GDP R&D FDI DevelopmentofAzerbaijan Republic NFES AzStat
–
–
–
– Foreign Direct InvestmentsForeignDirect
–
OrdinarySquares Least
GrossDomestic Product – ResearchDevelopmentand NationalunderFundof Entrepreneurship Support Ministry the ofEconomic
TheStatisticalState RepublicofCommittee theAzerbaijan of
List of List
ABBREVIATIONS 1
CEU eTD Collection the captures estimating to approach programs the of monitoring and and components different slightly are aspects these and contributes (2006) research per cap regional output is that country inthe area other no is there and city, capital otherwise develop not investments the of inequality regional the by
,
regional disparities that that disparities regional The aim of this research is to analyze and estimate the regional policy in Azerbaijan. inregional policythe analyzeestimate and to is research this of aimThe 2009 Since pointing out the main aspects of of aspects main the out pointing who adapts
to to have been have effect of contributing factors on the regional growth, regional the on factors contributing of effect
the current the in policies regional the study
the fetvns, transparency effectiveness,
Azerbaijan approaches .
ita. within the country the within the Ac government the by made
research with research cording to cording effectiveness has been implementing been has
of ae o been not have . We are having this liberty in order to reform oursocialorderreform Welibertythisin to are system,having
two analyses two The latter latter The from
statistics, which I
NTRODUCTION the his of of . the evaluation the The reason to launch the program launch the to reason The
a
qualitative analysis of the Croatian regional policy, policy, regional Croatian the of analysis qualitative Croatian case Croatian is full of full is
regional policy through through policy regional and work iiaig infcnl oe time over significantly mitigating 2
the rai ad China, and Croatia by
even before even efficiency
economic center of the country country the of center economic Vedran Dulabic (2011), and (2011), Dulabic Vedran which conflict withwhichrights.” ourfundamental conflict influences
inequality, discrimination and otherinequality,discriminationand things, a
of the regional policy. For Azerbaijan, For policy. regional the of s
tate tate ;
“What are weare“What libertythisfor? having and at
approach, and institutional system system institutional and approach,
least halfleast p
the program as the regions could could regions the as program the h cret research current the rogram that aims at reduction of of reduction at aims that rogram these aspects aspects these
and includes the major policy policy major the includes and an respectively as as
econometric developed in terms of of terms in developed was are B.R. Ambedkar B.R.
Zhang and Fan and Zhang administration, the persist the . .
T The former former The has been has he hog its through model that that model
regional ence The The
its its
CEU eTD Collection crucialregionalthefor policymaking effectivenessofregional and programs weight low very a in andhelp governmental 2006) like inequalities intervention. it that fact the 2011). by complicated Lessmann, in cited as (2005) al. et Elbers inequality regional growth economi circles (hereinafter most indicators of effects 2003) ide the ofeffectiveness different. is methodology the Nevertheless, tools. tf ky oiy ntuet ad xgnu non exogenous and instruments policy key ntify , and then run a run then and , . tool used
, cause political c politicalcause , However, the world practice world the However, R today c consequences on consequences c eg . Out of Out .
ional inequality represents inequality ional netet, icutd loans, discounted investments, referred to asOLS) referred to In order to to order In .
G h ise f egahcl iprte embodies disparities geographical of issue The s oa experience lobal
that of that by these these
program is h sae program. state the
regression accountable subsidization did not bringsignificant not did subsidization
perform an estimation of the policy and get some conclusions about conclusions some get and policy the of estimation an perform Great Britain (Armstrong and Taylor, 2000) Taylor, and (Armstrong Britain Great four contributing four oncerns, and make an make and oncerns, Brir 2003) (Barnier, the , I follow the standard approach to policyevaluation, to approach standard followthe I
national level national
regressionfixedwithpanelof the effects. data tends to worsen over time in case of of case in time over worsen to tends . T . shows he econometric model econometric he for has .
applied for the econometric model econometric the for applied one of the of one
determination of determination h etmto i md b te O the by made is estimation The a also also .
factors, the first two are of are two first the factors, successful cases cases successful hr o the of third This dcto, n structure and education, less positive less since underperforming areas slow areas underperforming since
economy volatile economy
3
suggests that that suggests most - oiy nlecn factors influencing policy broadly discussed issues in the economic economic the in issues discussed broadly h polm f einl nqaiy is inequality regional of problem The inter the examples
of the current research current the of sources inequalityregionalofthe - of of
personal positiveoutcomes the
. the nelig ass f neg of causes underlying Some economists estimate economists Some
nlss and analysis like
ih against fight
our interest as they are the the are they as interest our or Ireland or
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the case of case the
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or br or (Nicholas Rees, Rees, (Nicholas down a country country a down (Eric McVittie, McVittie, (Eric which means I meansI which
L estimation of of estimation estimates the estimates
east east the Italy, where where Italy, ought regional regional S quares
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CEU eTD Collection and Azerbaijan, Azerbaijan in policy regional on literature the that, to addition theories variation of coefficient form The countries. other some inequality economicliteraturecontribution to approach unique own its policymakers economics bearslossesotherwi spending policymakers. materialthe provides country the that claims it and policy; regional the of coordination the for responsible is that unit administrative Development Economic of Ministry the Currently, Firstly, here. The research the Secondly, is research the of importance The
and empirics empirics and on the regional development development regional the on
, and , in Azerbaijan in work . over time over the research research the At the same ti same the At Chapter
has the importance of t of importance the points out points
s st is
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the most important tools used by the by used tools important most the provides output o aayi ad estimation and analysis for m
for shows and estimations of estimations and e, e, ed study of the ongoingstudyofthe a it is important to estimate the regional policy since since policy regional the estimate to important is it
. s any similar research and does not possess any. Given this Given any.possess not does and research similar any e capita per better understanding of of understanding better
growing is subject he
oiy implications policy the results o results the of measurement are maximum/minimum ratio and the the and ratio maximum/minimum are measurement of has clear
s to be efficient and effective, effective, and efficient be to Catr one Chapter :
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h regions. the factual
is presented for presented is f h Rpbi o Azerbaijan of Republic the of two two
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the sources of of sources the describes supporting arguments can be stated stated be can arguments supporting measure government regional Ch pe two apter ment the a clearer analysis of that that of analysisclearer and regional inequality regional policy problem of of problem . Chapter four is the isfour Chapter . and compar and
for Azerbaijanithe recogni the whole society society whole the
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the and policymakers, the by recognized of For the comparison purposes comparison the For
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It It Daghlig Shirvan Daghlig
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nominal wage nominal economic regions level regions economic employees engaged in agriculture in engaged employees emoreisinformative.accurate and 2005 year withBaku
in Baku in Ganja Nakhchivan Guba holding - - Khachmaz Khachmaz Gazakh Gazakh
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h second The Source: the the Absheron can be seen be can s ionresults
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assume that that assume low t a b cniee a a as considered be can It ployment in agriculture in ployment
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region, which is crucial while thinking of regional regional of thinking while crucial is which region, 0.08 employment performance are Baku and Nakhchivan, Nakhchivan, and Baku are performance employment on inter on .
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o the for , 2010 ,
are presented in presented are Aran only 0.11
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Table 1, and it it and 1, Table
for all regions allfor - employed or or employed
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Baku 0.05 Theratiohas beenmultiplied numberslowbythehundred since too one are
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Zagatala Shaki it 3.42
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them
Khachmaz a
region Guba infcn role significant 8.06 . Since . regional disparities regional . T lower
- he s . This limitation is not very strong strong very not is limitation This .
possible the interest is interest the
Aran 5.53 education and education w in different regions, which which regions, different in w
aor contract labour
for limitation of this table is limitationtablethis of Shirvan Daglig 6.25
(Benneworth, 2001) (Benneworth, captur with higher share of of share higher with
in variation rather rather variation in
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the shows it as informative very is entities educational higher existing of number The calling for calling
in 2 in be summarized insummarized
011 higher educational entities in the countryin the entities higher educational r selected are olwn ot f the of out following fewrs te ubr f hs entities those of number the Afterwards, the . The absence of sufficient amount of higher educational entities across the regions regions the across entities educational higher of amount sufficient of absence The . . Among the regions, Absheron and Nakhchivan have similar results of 38.2% and 38.2% of results similar have Nakhchivan and Absheron regions, the Among .
25%. data on education and crimes per region. per crimes and education on data highe
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number of population of number T the able h number the ubr f opee ih col graduates school high complete of number
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- - - e Khachmaz Zagatala Gazakh last
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Number of higherNumbereducationalofby economic entities2010 regions, indicator indicator
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higher educational entities than the other regions other the than entities educational higher in of education, the number of PhD PhD of number the education, of
the table above, the capital city is incomparably more developed in terms inmoreterms incomparablydevelopedis capitalcity the above, table the
among formation
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The absence of people of academic career in regions is obvious from from obvious is regions in career academic of people of absence The regions’ PhD graduates does not reach 0.01%, and in Baku the the Baku in and 0.01%, reach not does graduates PhD regions’
the regions.the –
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entities educational Number higherof PhD certain
graduates in 2011, 2011, in graduates
inl o sca ecuin here exclusion social of signals 15 , Author’s Author’s work own ,
42 3 1 4 1 2 2 5 2
graduates 368 fall on Baku. Baku. on fall 368 ,
. is It must be also mentioned also be must It lo informative also Baku than other
ca r e which , er In percentage percentage In , and number number and ,
since it it since is not not is are are CEU eTD Collection countries here for inequality the of measurement inequality of measurement index GINI variation, of coefficient capita. 1.3. disparitiescapitalthe across oth and rational same officiaregistered dimens demographic wholeiscountry107 regions and 996, is kilometer of year the dimension leading exclusion The variable used for the measurement of the regional inequality is the regional output per per output regional the is inequality regional the of measurement the for used variable The demonstrated not is population of distribution the that surprising be might It population of Density As Afterwards, . Measure for hr ae eea tcnqe t maue h lvl f inequalities of level the measure to techniques several are There area of crimes to population ofareato crimes the maximum density captured captured density maximum the I adto t ta, this that, to addition In .
. The .
and
the 2012, and the results are not surprising. In Baku In surprising. not are results the and 2012, e
do number of crimes of number can be appli be can
information on information ment lly, and, thus, thus, and, lly,
not indicate any indicate not the
ion peopleper
it is it ofinequality acltd ubr ae oprd o those to compared are numbers calculated Te esn s ht h mjrt o people of majority the that is reason The .
the highest population density among the among density population highest the distribution ed o Azerbaijan for
the to the statistics of density described above, but above, described density of statistics the to
1 squarekilometer. 1 density population the ,
official data on pop officialon data the EU countries EU the the data data the
reduced
er regions evenhigher.er are technique with slight slight with and its dynamicsandits ,
s ae a a epaaoy atr o the for factor explanatory an as taken is and s 6 i Aseo, hra average whereas Absheron, in 161 is .
do security hi index Theil The
is 16 distinction suppor not
tde ad used and studied technique
(George Petrakos, 2005) Petrakos, (George in the in ulationdistribution
in the in Ol te is to r ue in used are two first the Only .
t though
lagging regions lagging the , the number of people per people of number the , o cluain f hm is them of calculation for
economic regions economic hoeia expectation theoretical .
for comparative analysis of of analysis comparative for
studied areas. For the other other the For areas. studied indicators live that
can be misleadingbe can . In fact, In .
ie a/i ratio max/min like
and
,
n au r not are Baku in
in this case this in density for the the for density is available available is
of some other other some of is
demographic demographic
also also Baku is the is Baku
of social social of
1 square 1 used applied applied for . ,
The The the the the for in in ,
CEU eTD Collection n P P y CV Where inequalitiesincountriesvarious Malekovic and Puljiz by applied represents narr not is data the as comparisons some 2011) Croatia i tot i
= number=of regions = national= averagevariableofexamination the under = variablei inexamination= under region = population= i in region
= national= population The –
. coefficientofvariation in parameter w of country limitation :
Jka ujz 2007) Puljiz, (Jakša aclto o the of calculation
an outlier of a large group of people. As to the coefficient the to As people. of group large a of outlier an s
since it puts too high stress on the outlie the on stress high too puts it since
maximum ,
and
is
applied o esr ieulte fr eeoig countries developing for inequalities measure to
owed down to individual income, income, individual to down owed (2007) (2007) - minimum ratio ratio minimum
for Azerbaijan:for n Lessman and 17
has
a
rs. Nevertheless, it is worth making worth is it Nevertheless, rs. simple (2011)
technique, in their measurements of of measurements their in
of variation, the formula the variation, of and the regional outlier outlier regional the and but but has
(Lessmann, (Lessmann,
certainly certainly
CEU eTD Collection tr slow too inequality of of that than higher is Azerbaijan in inequality regional current problem the of topicality the revealing in Latvia, for of perception variation that that situation better much indicate time over Azerbaijan in Source: Table and 2011. 2008, the
ansitionlikeeconomiesCroatia or 2011 2008 2006 Indonesia the coefficient o coefficient the Indonesia coefficient of variation of coefficient 4
According to the estimation, the dynamics signal dynamics the estimation, the to According inequality,the regional of capture dynamics the to Inorder
AzStat, Regional
to concludeto n rai i 00 is 2000 in Croatia in ratio Min/max and and in 2000. 2000. in the 12.6 20.1 19.3
it
Author’s calculationsown Ther Azerbaijani figures Azerbaijani is i nequality
equal to 0.74, and the max/min ratio ratio max/min the and 0.74, to equal a esultspresentedinare 4 Table
Despite positive tendency positive . Nevertheless, the results of the same the of results the Nevertheless, . for the regional output per capita per output regional the for measurement Coefficient of f variation is variation f the fact that fact the variation 0.39, and min/max ratio of 3. of ratio min/max and 0.39, 1.4 1.7
2 Hungary. . The highest coefficient of variation of coefficient highest The .
for Azerbaijan for . T .
in Azerbaijan. By the same token, token, same the By Azerbaijan. in
results
he pace of the reduction is much slower than in other inother than slower much is reduction the of pace he again lower, again the
18 problem
for Azerbaijanfor ;
the numbers are rounded to numbersdecimal.theone rounded are to . Simple comparison tells that the level of of level the that tells comparison Simple
has and is and a for the same country country same the for
reduction of the regional inequalities regional the of reduction a
was estimated for the years 2006, 2006, years the for estimated was 0 the diminishing
, w , calculations precisely country with with country maximum/minimum ratio and and maximum/minimumratio hich questions the optimistic optimistic the questions hich
equal to to equal 2000 in
trend
for Croatia in 2000 2000 in Croatia for the coefficient of of coefficient the is 4. is the , it is it , was estimated estimated was 1.2 3. 3. highest , Moreover, ,
possibly which is which
level
,
CEU eTD Collection and migration cause and people more attract to tend inhabitant per output higher with countries growth further its and agglomeration diminishing closer locate explain of saving is center one in agglomeration models. macroeconomic 2.1. failures applied policy the theories as mitigationofthe investigateexplanations regionalempirics;oftheinpolicies inequalitythe to and aimed theory at policy the of effectiveness problem the unde to important disparities. regional
disparit Regionalintheoryinequality s
As a find can one Today, C
are captured and adaptedincaptured are
discussed further discussed the regional disparities by existence of the transportation costs, which force which costs, transportation the of existence by disparities regional the HAPTER
ies between ies a sae erir te einl cnmc hois r sll bsd n the on based solely are theories economic regional the earlier, stated was . This understanding helps to to helps understanding This . ot o te transportation the of costs to each other other each to
(Aguayo, 2004) (Aguayo, problem rstand the rstand by different countries different by 2 In order to analyze and estimate the regional policy in Azerbaijan, it is is it Azerbaijan, in policy regional the estimate and analyze to order In .
R countries for EVIEWOF THE L According to to According . Mostly, regional disparities are studied and explainedstudiedandare disparitiesregional Mostly, .
are adapted inthe adapted are
western and central Europe. The hypothesis of the research was that that was research the of hypothesis The Europe. central and western and, ultimately, agglomerate. The limitations of this approach are approach this oflimitations The agglomerate. ultimately, and, in
world experience experience world
the country the , trying to establish the dependency between between dependencythe establish tryingto ,
, just , o o research of lot
and empirics and assessment ofassessment Azerbaijani
with some additional consideration of regional details. regional of consideration additional some with the core model of regional economics regional of model core the
. Thereby, t Thereby, . economic agents economic today in this field is field this in conduct analysis conduct ITERATURE analysis of Azerbaijani regional Azerbaijani of analysis in . 19
The conducted by many economists that that economists many by conducted
regional r he aim of this chapter is to analyze existing existing analyze to is chapter this of aim he i a eprcl td o the on study empirical an is e studied, and the reasons of success and and success of reasons the and studied, ON REGIONALON INEQUALI
policymaking on the transportation cost transportation the on and estimation and regional policymaking. policymaking. and attractiveness of area area of attractiveness of the relevance and and relevance the of
inequality. possible sources of of sources possible , the root cause of of cause root the , in
the same way way samethe s . In .
TY
s inertia of of inertia
Besides explain firms to to firms
sum, it sum,
The The
the s ,
CEU eTD Collection demand development regional the for stimulations estimated. count economic is humancapitalotherwise is following: support to order 19 the of beginning the exactly is theory this behind point this continuedbe to stated is growth development regional in differences the explains inintegrated the model,is also Solow thegrowth, ininvestmentsinfrastructureshall regions. the bringdevelopment to true is theory this If infrastructure. in investments theory save helpregionscosts, to the explaining was It agglomeration. time over
positively population growth. growth. population ries including Azerbaijan, including ries and the estimation estimation the and The Nevertheless, depends
growth is growth andarguable the technological improve technological the the reason of underperformance of the regions is lack of capital of lack is regions the of underperformance of reason the h Kyein income Keynesian The monetary correlated with the with correlated
on a market multiplier. market a on their th not all theories necessarily support allsupport necessarilynot theories
century. stimulations
. Despite theory this of Adaptation development. The other explanatory Theother su
offervaluehigheradded, ggest that in order to reallocateeconomicactivities to in order that ggest
I
do
Azerbaijan n
with a capital influx capital a with investments, h ter suggestions, theory the islongmoreaforrelevant
not always bring positive results positive bring always not of growth growth of reason ment - xedtr approach expenditure
The only
;
why and
h gvrmn ivss n h regions the in invests government the complexity comes complexity lack is and 20 ht r ue a a oiyaig ol y many by tool policymaking a as used are that can can parameter
it states that that states it
h cptl rnfr wr s popular so were transfers capital the main idea of the theory theory the of idea main analysis of the regional economics. regional analysisthe of through
induce attract aforceattract and work further. develop The for the regional growth in Azerbaijan, then then Azerbaijan, in growth regional the for until the regional steady regional the until investments.
in the framework of the growth model in frameworkgrowth ofthe the of the differences in capital in differences the a further development. further a the relationship of population and and population of relationship the - term ehooia improve technological discusses h efciees f the of effectiveness the
analysis from the fact the from
n u analysis our in
either Theneo
the local government government local the
(A.F.Darrat, 1999) (A.F.Darrat, , and, and, , that that if the if - - classical model of classicalmodelof state level, and at at and level, state there is a need in need ais there that a that more developed developed more thus, need to be to need thus, ir development development ir
The rationale The
ment implies stocks
The theory Thetheory
s well as multiplier boost of of boost
and/or in the the in . The The .
. the the
in in
CEU eTD Collection inequality regional the to contribute conditionally they that shows eventually and investments governmental the of efficiency the on concentrates analysis The development. the of effectiveness Azerbaijan to relevance particular under regions the to suitable most factors different analyzed and patterns estimationof at data 2003) Faggian, (Alessandra data statistical and region each for separately calculated is multiplier The results. low bringing are stimulations the and lower, gets multiplier the high, is import to propensity propensity and consume to propensity by determined is model in multiplier market the aforementioned, the Given nation. functioning are and the of inefficiency is government the effect When investments. negative possible other The effect. spillover interregional an the import, improved stimulations the Through imports. further on investments their spend to likely are lowwheproductivityandinitiallyis turn pushes in and demand which local places, improves job new create companies new that fact the given economy local the may
have both negative and positive effects. Support of the local businesses positively affects affects positively businesses local the of Support effects. positive and negative both have
Research into into Research level regional
in effects of effects
one region can end up with up end can region one at
einl le regional public stimulation public
with is not possible not is the the
the otiuig factors contributing governmentstimulations , and ,
e. The vel. ep of help
the the n - is technique to be applied applied be to upre ente supported
a the local economy depends on imports, newthelocal on enterprises depends economy the
s provisions h wr of work the oa eooy p O te te hn, whe hand, other the On up. economy local
for regional a
the higher growth in the other region other the in growth higher
21 of the calculation the of
for regional dispar regional
utpir a cluae b svrl studies several by calculated was multiplier only,
for regional pie ae o cpbe of capable not are rprises for Azerbaijanfor hn ad a (06, h s who (2006), Fan and Zhang Azerbaijan hi eitne s ls fr h whole the for loss a is existence their development the
to import on regional level. If the the If level. regional on import to ities reduction for Chinese rural rural Chinese for reduction ities . ensa income Keynesian is
Nevertheless, the necessity of of necessity the Nevertheless,
can be easilycanbe here. concluded simple but simple requires
a followed has investigation
due to the lack of of lack the to due s generat , which is which ,
large scope of of scope large reduction - expenditure expenditure n tudies
ing the local local the
various
. called . The The . profit profit
In a a In the the
CEU eTD Collection in need structure a of is convergence there sometimes side, other the From improvement. technological the through 2010) development regional in role a play also can governmental end may discussed previously the to Similarly insignificant be to estimated are inequality regional the of reduction at aimed spending foreignwhereasisinvestments ofsignificant, mostregion.The effect governmental the direct the ismodel econometric The regions. the across attraction investments direct foreign unequal by caused Selvanathan and Tang by performed to due pro ofcontinuation result explainedasthe inequality.Interestingly,regional the for efficient most the are R&D and education in investments government that results different the present also authors finding,the ultimately areas lagging the in up end not did investments indeed investments ,
higherreturns Kwa 2003) (Kawka, that believe economists Some A also also
- similar attempt to establish the factors contributing to contributingto factors establishthe to attempt similar , up
eaie correlation negative a regression that isregressiona that tr stimulations being
incenter the oiiey corre positively inefficient. . From s .
cos h regions the across the
between . These works show the importance of evaluation of the the of evaluation of importance the show works These yingestimate alongfactorsall to with contributing the
n sd, pcaiain can specialization side, one
the majority of the investments worsen inequality, which is is inequality,whichinvestments worsen the majorityof the (2005). The hypothesis states hypothesis The (2005). lates a case structure structure tmltos and stimulations
, with - this central allocation of the investments of government ofgovernment investments centralthe of allocation s ta lgig areas lagging that so , 22 n, hs ne t b considered be to need thus, and,
research
of productivity . It implies that for some regions there is, is, there regions some for that implies It .
from region
different types of investments and find find investmentsand typesof different show al economie al einl growth regional
s increase a regional productivity productivity regional a increase regional inequality in China was was China in inequalityregional n China in
that that
that the region inequality is is inequality region the that in some cases cases some in may s and , but some of those those of some but , I adto t this to addition In . catch their their the - up (Kowalewski, (Kowalewski, specialization specialization reduction of of reduction
stimulation with more more with FDI pe FDI
at at all r .
CEU eTD Collection inefficiency,iswhich bring might regulation a such that is second and invest, to refuse might locality about making of amount the reduce might they first, successful controversially is policy this that argue 238) page (2000, Taylor and Armstrong Nevertheless, implied It transfers. capital with engaged mostly were They promi approach interventions the of beginning policymaking regional the authors, the by captured brilliantly and studied was policymaking recommendations Hence, follows 2.2. isregionsagriculture. ones developed R nent in the regional planning, and planning, regional inthe nent egional policy in theory and practiceegionaltheory policy and in
h hsoy f develop of history The policymaking, regional the in country inexperienced an is Azerbaijan Since a general a the same strategy same the was Te an oneagmn aant the against counterargument main The .
like mostly used in 1950 in used mostly .
This fact can be also check also be can fact This 19 review of review
for the regionalthefor development h investments the th
an centur undesirable problem in the moderninundesirablecompetitive problem the
over time over
existing a y
high government intervention government high up to today. The earliest approach earliest The today. to up ment the - , 1960s. In addition to that, the regional agencies were very very were agencies regional the that, to addition In 1960s. policy measures and tools is crucial is tools and measures policy
in and
industrial
of their regulation was performed by performed was regulation their construction construction investments a been has
it cnmc huh i te rmwr o regional of framework the in thought economic d
oes ed for Azerbaijan, where the main activity in the the in activity main the where Azerbaijan, for ed
23 in
control and/or and/or control
not try not Azerbaijan.
developing oto o bsns allocations business of control per se per of housing or or housing of Stimson and Stough and Stimson to apply some some apply to , as firms bounded in their decision decision their in bounded firms as , in a in
n varying and industry
es general economic atmosphere economic general
involved other other changes in its approach its in changes world for the for al
a (2008). According to to According (2008). location
central government. government. central infrastructure. vrie from overtime strong .
assessment and and assessment s
government is twofold: twofold: is ln with along it
mostly
This the the . .
CEU eTD Collection it have to not group left on by which of possession the good, positional of argument the competitive a brings The it. to advantage which technology, its in development further has obviously progress sustainableincreaseratherthe growth justper than domesticregion. the gross of product also a countries. the among or countries atmosph economic local the influences which regions, certain of advantages the raised isregionspilled over policy regional concentrationover isinnovation parks when realized. period It exactlythe of importance of realization full the when 1980s, after is which goals was approach monetary n
low improvementofa
taken into consideration. Technology, efficiency, environment became the key features of of features key the became environment efficiency, Technology, consideration. into taken Te te iprat eeomn o eooi tikn ws h fcs n value on focus the was thinking economic of development important other The . protection attributable to to attributable protection n short, In impact final the least, not but Last A , in fact, in , . Opening . tr ul lmnto o te od tnad and standard, gold the of elimination full fter su of issue that
techno
a focus on technology on focus a the up
problem of of problem
ti
national the I ght sustainable development. The large conglomerates are mostly using using mostly are conglomerates large The development. sustainable n the of paradigm of boarders of oy gi bcms ky factor. key a becomes again logy
this (Pan A. Yotopoulos, 2007) Yotopoulos, A. (Pan others en a s the regions one to another; to one regions the s oiaig ol n osig cnmc development economic boosting in tool dominating
competitive environment competitive competitiveness .
asymmetric the modern the is a win/lose situation, and with low government intervention government low with and situation, win/lose a collaborative advantage collaborative
and productivity and
on regional policymaking was policymaking regional on
technological technological period, there is a large a is there period, as well. as 24
.
According to Pagano to According
In addition to Inadditionth to started the regional development might serve as as serve might development regional the
n yti approach this by and tool dominating the into switched It . the development can be also also be can development
h tcnlgcl advancement technological the h ae with area The
being the Wood, Bretton the to switch
was rapidly growingrapidly was e group of economies force economies of group e
establish risk of risk at, qualityat, isthe growth of
high a (Pan A. Yotopoulos, Yotopoulos, A. (Pan shift globalization, which which globalization, ing ere , . s
benefits
A of productions productions of
and achieving achieving and tech of of fter1990 . criticized Ii Ii almost almost nological implies
- of one one of ad
s the the s ded, ded, - was was s
all by ,
a a
CEU eTD Collection inefficiency by caused was sea a was wasengagedin regional It as earlypolicy as the well. as policy provide practice and international experience the policy, regional a mostadvancedofmodernthe oftoolstheeconomic conditions. see is regions, certain across them of distribution and patents of like acquisition support, relations.industrial improvethe to innovation,and stimulate enterprises medium and small progress. technological ones of custom administrativeor requirements thr realized be can latter the and support; ed like measures through achieved be can former The capital. and/or labour the of reallocation find can one tools presented of list the In on countries. with up catch to regions lagging disadvantages and 2007)
regional agencies. regional technology intechnology the ad hs tos r suppo are tools those and ; , the positional good of the modern society is nothing but but nothing is society modern the of good positional the , Despite the fact that that fact the Despite the define 233) page (2000, Taylor and Armstrong -
change in Britain regional policy in policy regional Britain in change The implication of the aforem the of implication The The country that provides that country The
tes Ti creates This others.
analysisregionalofthe policy Importantly The . Before Before . the theoretical the argument to create jobs, to diversify activities, to push competition, to to competition, push to activities, diversify to jobs, create to , the authors of the book stress some tools as sometoolsstress book the of authors the , leading ones leading t for rt th subsidies,R&D s,
in
at a entioned for Azerbaijan is a need to consider to need a is Azerbaijan for entioned
a
ao ftefre ol is tool former the of favor oooy f nweg, n lae n otos for options no leaves and knowledge, of monopoly change in investment and enterprises medium and small literature is helpful for understanding of the tools for for tools the of understanding for helpful is literature great experience in this field is the United Kingdom. United the is field this inexperience great cto, cuainl trainings occupational ucation, uh h dsone l discounted the ough
1978 , 25 the which have access to the markets of almost all almost of markets the to access have which
te prah a msl based mostly was approach the , .
- 1920s. Despite earlythe1920s. there ofstart, period
1979
advisoryand services,
(Robert J. Bennet, 1991, p. 37) p. 1991, Bennet, J. (Robert main tools main At the same timesame the At
technology as tx cuts tax oans, some
the of regional policymaking regional of
useful cases of cases useful
ultimate ability ultimate , which benefits ones ones benefits which ,
or or , t , the most the
the migration costs’ costs’ migration he technological technological he , relaxation of of relaxation , establishment establishment on emphasis emphasis preferred
n as one one asn regional regional , which ,
“social of the the of . CEU eTD Collection fromevident are practice efficiency the of monitoring andchanges to ch adapted Britain Great success, i the that such policy the from loser net largest third is UK the all in all funds; structural the in contributors net are show relaxedforce, labour single and EU regulations, themarket. access to regi the was policy UK the of achievement important given competition, of development replace were subsidies automated played inBritain. with up ended and industries, certain in mechanisms causing was which interventions, governmental in cited way: following welfare” .
Today, within the frameworks of the EU Regional Policy, out of 37 regions 37 of out Policy, Regional EU the of frameworks the within Today, (Pawel Swidlicki, 2012) Swidlicki, (Pawel o umrz te ae f h Uie Kndm te urn stain is situation current the Kingdom, United the of case the summarize To n The the ons (Armstrong and Taylor, 2000 Taylor, and (Armstrong ons oet . Bennet J. Robert for
oe f aiiao of facilitator of role
incountry ofeconomythethe ew region ew vr rgo. t a lrey rtczd and criticized largely was It region. every nvestments alone cannot form a regional policy. In order to switch from failure to to failure fromswitch to order In policy. regional a form cannot alone nvestments “…[regional policy] played with more enthusiasm than success” (HoC, 1973, as 1973, (HoC, success” than enthusiasm more with played policy] “…[regional al policy was mostly dominated by market forces, and the government government the and forces, market by dominated mostly was policy al .
19, p 1991, , . The influence of the case of Britain on the current analysis is is analysis current the on Britain of case the of influence The anges that were relevant for it for relevant were that anges production . wt slcie aia gat. T grants. capital selective with d
8. The 38). a
a ih rsue rm the from pressure high
). The factors that affected this were this affected that factors The ). new, more liberalistic approach in the regional policy policy regional the in approach liberalistic more new, .
It was low seenproductivity source primaryofasIt the
of investments of ahr than rather a 26 meu to impetus
high attraction of foreign direct investments to to investments direct foreign of attraction high
economic its
the changes was was changes the
are controller. By the same token, the the token, same the By controller.
a ioial commented ironically was inflexibility and blocking adjust adjust blocking and inflexibility . supported Thereby, flexibility of a country country a flexibilityof Thereby, newly
he not only not pnd market opened
new the
flexibility of the the of flexibility
inefficiency of of inefficiency
i was aim of Britain, 35 35 Britain, of by to interesting
theory but but theory
s in the the in . The The . t he he CEU eTD Collection EU results successful implementing efficient in seen be can Policy Cohesion sugges of terms in enough strong yet not such Incaseinvestments ofreturns. andCroatia, obviously, efficiency, agents economic all of development sectors. private and public the efficiency stated on theirofficial f Ministry The investments the are Croatia tools disadvantageous and advantageous
oein oiy at enough. fast policy cohesion estimations author believes that that believes author tion
In contrast to Croatia, the successful case of regional policy in the frameworks of the EU EU the of frameworks the in policy regional of case successful Croatia,the to contrast In policy regional Croatian the Nevertheless, region Croatian of overview The has been has
ones
or Regional Development Regional or
approaches for Croatiafor byauthor the , high awareness of awareness high , n oe motn oe hl be shall notes important some and , a .
highly einl oiy eoe the before policy regional Despite the fact that the institutional framewinstitutionalthe that fact the Despite came out came
into human resources and physical infrastructure physical and resources human into
web pageweb 2011) Dulabic, (Vedran requires influenced by influenced wih a b ahee b dvlpd ntttoa framework institutional developed by achieved be can which ,
usata institutional substantial of the fact that that fact the of . the case of of case the a
some quantitative analysis of the correlation between the the between correlation the of analysis quantitative some
h avnae f hs prah is approach this of advantage The government strategy government
, which is which , wasa hs requirements These
atesi and partnership the EU Cohesion policy Cohesion EU the
l oiy y ui e al (2011 all et Dubic by policy al clearerand simpler of there isclearlyno responsible there authority Ireland managed t managed Ireland Ireland. The case is believed to be one of one be to believed is case The Ireland.
directly in charge for the regional policy regional the for charge in directly . einl policy regional ntaiain f the of initialization 27 The
stated
is partnership improvement
rtczd o the for criticized fiiny approach efficiency
by a public a by
novd hne i te institutional the in changes involved ee isl,Ieadws not was Ireland Firstly, here.
. . The The . institutionalframework o adapt to the requirements of the the of requirements the to adapt o officiallyestablished, was ork h modern The implies the cooperation between between cooperation the implies
, is most usedmost and U oein Policy. Cohesion EU , which is a positive sign positive a is which , h etbihet f the of establishment the , lack of partnership and and partnership of lack
a coherent and stable stable and coherent a ultimately es ) . einl oiy in policy regional
show tools of the policy policy oftoolsthe The main policy policy main The
to implement to ,
joint efforts joint some .
;
the most most the which is is which actively . other The The The it is it .
CEU eTD Collection factor framework country. the of policy regional within processes action and the planning training during the up awareness speeded atmosphere and This program. participation public the provided which environment, political keep allows independency regional with policy their implement to authorized before structure hierarchical country the Ireland. of framework ing s
that canthat bring significant Secondly
coordination of allcoordination level.bodiesadministrativeof on country the , which ,
allowed Ireland Ireland allowed , the contributing factor contributingfactor theof successful , policyalready regional was existingsocio are
This a missing ingredient in the Croatian regional policy, regional Croatian the in ingredient missing a willingness to to willingness this policy this to to
for It follows from the above that the partnership the that above the from follows It successinpolicyma the implement more individual more ; and after the initiation of the program two regions were were regions two program the ofinitiation the after and ; fulfill
h changes the a 28 ih independency high the requirements of the policy the of requirements the
treatment king. king. . n at t fact, In
of
the local economies as well as as well as economies local the
he government had a highly highly a had government he (Nicholas (Nicholas
are es 2006) Rees,
indeed important indeed and flexibility and n institutional and .
The the the
of of -
CEU eTD Collection 2009 for Socio Programon State theis AzerbaijanRepublic inthe Azerbaijan2008 for of years,2013 Socio on Program Socio on Program are document descriptive most The regional the of Republic the of Development Azerbaijan. Economic of Ministry the by published and announced of and 2011) Dulabic, (Vedran prospects ongoing the close a requires the
published effectiveness, effectiveness, program The The - 2013 years,2013 for and, reason,this the .
h picpl set o te rgas r aaye bte when better analyzed are programs the of aspects principal The
four sta four the Upon the whole, there are four state programs that are that programs state four are there whole, the Upon analy inequality
policy programs arranged so far and and far so arranged programs policy and availableand
s State Program on poverty reduction and sustainable development in the Republic inRepublic the development sustainableand reduction Program poverty on State . study
sis The state programs that consider the regional development in Azerbaijan are are Azerbaijan in development regional the consider that programs state The - - transparency Economic Development of Regions of the Republic of Azerbaijan for 2009 for Azerbaijan of Republic the of Regions of Development Economic Economic Development of Baku and its settlements in 2011 in settlements its and Baku of Development Economic te programs that are claimed as as claimedare programs that te C
n etmto of estimation and HAPTER , but only one only but , of of - 20 , which allow which , its 15 yearsand 15 for for each state program. eachfor state
components - Economic Development of Regions of the Republic of Azerbaijan of Republic the of Regionsof EconomicDevelopment 2008
and s 3.
for the analysis the for
R - efficiency 2015 EGIONAL POLICYEGIONAL IN among them among s
the for separate for
the the and
years S tate tate fetvns o te einl policy regional the of effectiveness
analysis details
approach 29 . P It isclear It
rogram of the state programs state the of focuses directly on the regional the on directly focuses
involving consider . The aim of this chapter is to to is chapter this of aim The . to analyze them from different qualitative qualitative different from them analyze to
starts with starts particularthisprogram. ,
and on on
bytitles the ation R A institutionalsyste regional development, are development, regional eliable ZERBAIJAN
of of claimed to be engaged with with engaged be to claimed administration F
that ood ood are
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and 2013, 2013, in development , present
components components
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s that that s all State State State of of - .
CEU eTD Collection loans. program the of initialization thanearlier started previous the from returns the of Interest consist partly and government the by financed funds The Nakhchivan. except Azerbaijan t that noted be should t NFES, entrepreneurship of consideration 2008 Reports, (Annual primary objective implementation. policy regional the of arrangements financial the in role specific a plays financial of control the for responsibleis ministry executive all between coordinate and control to is ministry Developm Economic of Ministry the by and employment, reduction poverty of pro export non constructions, of diversification are program the of tasks main the Azerbaijan, of Development Economic of Ministry the to According objectives. Azerbaijanfor 2009 3.1 .
StateProgram Socio on Administration of the policy pr policy the of Administration program The ingly, he majority of the majorityof he resources are mostly provided by the central government and the NFES. NFES. the and government central the by provided mostly are resources
the
in the regions the in FS a be poiig h dsone loans discounted the providing been has NFES is a is each each -
2013 years 2013 development of small and mediumwith entrepreneurship smalland of development intends e oeay upr o te ud s itiue ars al ein in regions all across distributed is fund the of support monetary he - eins share, region’s 2011) regional duction, improvement of the business environment, increase of of increase environment, business the of improvement duction, - EconomicRepublicDevelopmentof ofRegions of the to to
. and in the cap the in and
execut h Fn poie dsone credits discounted provides Fund The businesses
ogram falls on the local executive bodies, and is managed managed is and bodies, executive local the on falls ogram on
e all
countryand ent various economic measures with a large scope of of scope large a with measures economic various
n i ti wy promotes way this in and used for the provision of the of provision the for used investments that are considered by the program. theconsidered byare that investments
- f h Rpbi o Azerbaijan of Republic the of that receive loans receive that 30 oil sector, strengthening of the infrastructure infrastructure the of strengthening sector, oil . city. ital The role of the NFES is particularly relevant to relevant particularlyis NFES the of role The
regional levelregional According to the annual reports of the the of reports annual the to According organs are
involved by the program the by involved . ic 20, which 2004, since
engaged with agriculture. agriculture. with engaged
cheap loans are partly partly are loans cheap ml ad medium and small . with financial The role of the the of role The preliminary preliminary The means it it means
support support NFES NFES . The The The Its It
CEU eTD Collection trainingseducation,and ecology, here. are program the of concentrations key the way, this In calculated is measures of number the that, After types. their analysis, current the of framework the in country plan depa development measures implementation official an required information The which program, the within chapter. next the in conducted is effectiveness the of estimation the Nevertheless, together. discussed or components criteria Thedevelopment.effect it since Azerbaijan in policy regional the of analysis the
are divided divided are The
With the intention of intention the With the analyze to order In - that canthat sc The . se ale h atos plan actions The
state components are important asthey important are components ye o maue ae infras are measures of types d actions d
, show show
rnia tools principal
n the and document by their geographical geographical their by r tment a lotaabout efficiency the , and the others considerothersthe and the , iveness
of the Ministry of Economic Development Economic of Ministry the of for it for corresponding
also also
that summarizing s vial i te e o dcmns ulse b the by published documents of set the in available is
is of effectiveness of t of t uses it allows for estimation of the effectiveness of the program later. program the of effectiveness the of estimation for allows
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and capturing capturing and h ls of list the tructure, support of local businesses, privatization, privatization, businesses, local of support tructure,
of the planned the of
support support of the regionalofthe policy 31 follow the main direction of monetaryallocation direction mainof followthe
the program, there is a need to to need a is there program, the
citiesand wee oe f them of some where , for h considered the possible to be summed up and presented presented and up summed be to possible the components the
the regional development isregional the development ;
measures contributes region according it . The action p action The .
os o show not does s - . The measures The . scaledactivities. per se per are for each for
esrs term measures, d irectly classified according to to according classified of the regional policy, policy, regional the of . lan of the program is program the of lan
consider
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type and type to distinguish the distinguish
in the action action the in ot o the of costs h regional the
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regional regional f their of
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CEU eTD Collection wasinrealized country the small a constitutes 2008 (AnnualReports, the for the of part vast the year, each for published NFSE the of report the to According businesses involves measures of number larger that means which separately, supp be to long continued a for government the by supported been has agriculture plan, activities where chapter, innext estimationthe isthe regionalof the performed. program investments construction the measures, infrastructure costs activit other some and of repair repair, and construction housing supply, water networks, power electric of construction highways, and roads the regions
ies are not not are small and medium entrepreneurship support mediumentrepreneurship smalland P mainly businesses local of support The containsinfrastructure, one, first The rivatization , expansion of the local industries local the of expansion , ht nov te nrsrcueo te iis n regions and cities the of infrastructure the involve that Te measures The . for
a hw i te report the in shown
construction region.
part part
is a self a is - orted 2011) of the measures the of hs ye f h measurement the of type This different kinds of kinds different after breakafter the assigne
- . works. works. xlntr measure explanatory today
t te nrsrcue include infrastructure the to d
y h p the by This category represents represents category This Nvrhls, o estimat for Nevertheless, . , which is n is which , - up of the Soviet Union. Soviet ofthe up
or
the buildings
rogram. promotion of the export. According to the action the to According export. the of promotion 32 contains a contains
investments that considerconstruction that investments
,
and is considered is and falls on the agriculture businessesagriculture the fallson ot surprising; t surprising; ot are , s industry each considers program The like school, cultural or or cultural school, like
available at available can be easily attributed to the NFES. NFES. the to attributed easily be can support of support both small and large investments large and small both
ion of the efficiency of the the of efficiency the of ion
.
the construction or repair of of repair or construction the he main part of privatization privatization of part main he As it was stated earlier, the the earlier, stated was it As support of support
some type some the AzStat the only period of of period
for
larger a s
pr building sport . It is It .
funds provided provided funds few regions. It It regions. few of time, and is is and time,
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CEU eTD Collection authoritie regional local the to assigned is independency tax no that country a on only itdevelopmentcanevenfruitful bringinthough some the outcomes regions. some for planned also p database.As defense Thehere. included also isqualityfood the standardization of rehabilitation, forest regions. is measures educational of share the all, in All of number regions among bring to expected not is school of repair or construction basic that education school regional infrastructure are they since of employees rogram. Besides, the Besides, rogram. at u nt es,tx piiain s a is optimization tax least, not but Last information some create to aim that measures of group the represents Information self are groups two next The and/or farmers for trainings local of sponsorship the include education and Trainings .
primary school school primary which varies largely varies which
an
ahr hn education than rather some . calculated
example, for manyfor investigationnaturalisexample, ofregionsconsidere resources It would be relevant to include the include to relevant be would It in 2010 constitutes 99.8 in both urban and rural areas rural and urban both in 99.8 constitutes 2010 in - wid
other fields. This group of measures excludes the construction of schools, schools, of construction the excludes measures of group This fields. other e scale. The details are not provided by the actions plan, but it is obvious obvious is it but plan, actions the by provided not are details The scale. e creation of the of creation and education.
in
reduction of pollution. In addition to these measures, the the measures, these to addition In pollution. of reduction h infr the across the regions the across hs ru o maue de nt iety fet h regional the affect directly not does measures of group This
The level of population aged over 15 years 15 over aged population of level The srcue Te ainl t put to rationale The astructure. - s ht those that is explanatory as well. Ecology contains the forest planting, planting, forest the contains Ecology well. as explanatory electronic 33
database of of database self
, but it is not considered by the state program. state the by considered not is it but , low new
construction of higher education higher of construction - explanatory and ,
schools they the security currently existing information is information existing currently do
are measure
long not
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infcnl change significantly s - (AzStat), (AzStat), run . Even though the tax tax the though Even . ad t is it and , educational
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CEU eTD Collection plan optimization.tax consider differences country the concentration estimated be main distinctionthe of for as well as program the of principalthe direction isregionalwith independency granted governments some measure optimization shows The regiona The MinistrySource: Economic Development Republicofof theAzerbaijan of Graph3 below. represented is actions the Theof summary ed for infrastructure. the edTheis measuresdistinctive feature ofexistenceset of this of the A i is it As . -
number of measures wi the 10 15 20 25 for 0 5 on construction on d
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Measurescountry consideringthe hi effectiveness their l 21 measures are summarized in summarized are measures follows is planned is
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, it is considered for the whole country at once, and none of the the of none and once, at country whole the for considered is it , .
h maue ae itiue vr ueuly and unequally, very distributed are measures The 1
type type of measure
can be easily concluded from the from concluded easily be can 34 4
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CEU eTD Collection are programs the of reports chapternext assessedis regional development the on effect their andloans, discounted and investments are measures of groups two medium and small development regional the work hence, chapter. regions Total Nakchivan ShirvanDaghli Garabakh Yukhari Aran Guba Lankaran Shaki Zagatala Ganja Gazakh Absheron Baku
-
Khachmaz I doinclude not I them The table above implies that that implies above table The Azerbaijan RepublicofMinistrythe Source: Development of Economic Table The n h table the in The
transparency o transparency .
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5
measuresNumberconsideringof economic regions the Infrastructure businesses. While trying to to trying While businesses. .
and tax tax and T e cnmc ein classification regions economic he f the state program state the f planning 841 242 152 in of optimization 29 57 44 78 82 92 40 25 ulse b te ministry the by published
the table. table. the
primary interest. interest. primary support Business Te eod oiat measures dominant second The . the 14 10 84 23 vast majority of the measures consider construction consider measures the of majority vast 8 9 2 0 7 4 7
types of measures of types Privatization is ambiguous is 35 estimate the regional policy of the country, these these country, the of policy regional the estimate
The quantitative The 0 0 0 0 1 2 0 0 0 1 0
o ec year. each for
Education is , and cannot be easily easily be cannot and ,
are not planned for the regions, regions, theforplanned not are h sm as same the
estimation of of estimation
0 0 1 0 0 2 0 0 1 0 0
ye is type
Ecology h rprs contain reports The
described in the first first the in described
10 28 the 2 1 1 2 3 4 0 1 4
all construction construction all , Author’s own Author’s own , Information upr f the of support analyzed 31 in the inthe . 0 1 3 9 1 3 5 5 2 2 The The
and and
for a
CEU eTD Collection weaker program the makes whichcountry, the responsible and problem the for process. the in involved not are Development Economic of Ministry the by controlled and coordinated highly additional frominformationdetailed appropriate the in interested is one if and sufficient, year s the grant loans to contrast positivesign effectiveness regions. the across distribution money region. each for places economic value nominal and share percentage contains report the data, statistical the the on information bears description successes of description tate tate . positively positively for each economic region, and show the statistical share of of share statistical the show and region, economic each for This can be can This The developed p
rogram remarks fu their without region
the reports of the ministry, t ministry, the of reports the description of the of description
of transparency of analyses inl aot rnprny Nvrhls, h ifrain n h rprs s not is reports the in information the Nevertheless, transparency. about signals
under investigation under
taken about institutional framework and monitoring and framework institutional about a recovered or constructed entities, constructed or recovered ic te administrative the since
, from which the absence of efficiency approach is concludedis approach efficiency of absence the fromwhich , qualitative h lcig nomto is information lacking The
of the of as
a
is the fact that the that fact theis report on businesses support businesses on report state program state regional development regional
It means that there is no focal entity that would b would that entity focal no is there that means It for the monitoring and analysis of the regional development in development regional the of analysis and monitoring the for character. character. te bekon ad shows and breakdown, rther a closer a .
The fact that the reports are written and published for each each for writtenareand published reports the that fact The he
government se The report does not provide any efficiency or or efficiency any provide not does report The
of the regional development regional the of study of the program, he/she needs to call for mor for call to needs he/she program, the of study A repor
(Vedran Dulabic, 2011) Dulabic, (Vedran 36 participants NFES publishes its own report for report ownits publishes NFES infcn pr o part significant
ts quantitative
contain bodies. and the activities of those entities. those of activities the and through
types of the of types
r msl local mostly are
a
a list of list a
breakdow
. the estimations, and more detailed detailed more and estimations, economic activities receiving a a receiving activities economic The institutional system is not is systeminstitutional The te eot contains report the f number of established job job established of number . realized actions; and this this and actions; realized . The . This might be one of the the of onebe might This measure
n of sums of of sums of n is finalized is s
of investments per investments of specialized s official
considered by considered every e . Besides, the Besides, accountable accountable with some some with provided provided
year.
As bodies bodies bodies brief for In In e
CEU eTD Collection in country. inequality objectives of scope large Azerbaijan2008 for of in Republic the regionalgrowth its from it programs, state development regional the in listed construction ( welfare ecology, also considers It Baku. around settlements 2011 in settlements exclusion. they since regiona of part a as taken be cannot they and development, details such have but inequality, regional the consider primarily 3.2 regionalofthe policy d country the why reasons dicators of national of dicators .
The otherTheprograms state The second one is the State Program on Poverty Reduction and Sustainable Development Development Sustainable and Reduction Poverty Program on State theis secondone The one, first The There careful
By the same token, t token, same the By are although
s
s h peiu program previous the as of new buildings for sport, culture, and other purposes. Even though the program isEvenpurposes. programculture,andthe though other sport, for buildingsnew of
are published .
study,
three
-
03 er focuses years 2013 it recognizes the difficulties of unequal development persistent in the the in persistent development unequal of difficulties the recognizes it so far so the scale
that that more
in the list of the regional state programs, it is important to justify their their justify to important is it programs, state regional the of list the in
State Program on Socio on Program State b on analysis similar possessesany not oes
. ut the program the
as
programs mentioned in the beginning of the chapter chapter the of beginning the in mentioned programs
on the national scale. It does not focus primarily on the regional regional the on primarily focus not does It scale. national the on inflation, poverty, education, birth expectancy birth education, poverty, inflation, announced by thecountry by announced e ia maual treso ti porm are program this of targets measurable final he -
2015 years. It is a very strong policy program with a very very a with verypolicyis strong program It a years. 2015
n h thesis, the in does not aim to reduce region reduce to aim not does mainly 37
- n h ifatutr ad re and infrastructure the on Economic Development of Baku city and its and city Baku of Development Economic some is obvious from its title its from obviousis
s hi ojcie ae o te regional the not are objectives their as
effect on it. on effect l policy of the country. country. the of policy l
like the quality and effe and quality the electricity They are not presented not are They al inequality al , and is also also is and , , and some others some and ,
or - building of the the of building
such ae supply), water Nevertheless,
or boost the boost or that that econom c tiveness tiveness evident o not do in ic ic .
CEU eTD Collection through businesses theis tool former The enterprises. medium and t analysis, be to need policy the of characteristics characteristicmainThe 3.3. regionalAzerbaijan ofthe in policy it food of quality the of terms in development regional the affect might program whatsoever. development regional not and food, of quality the is program the of focus main level regional on measures any consider not does development agriculture the q country the of field it As 2015). Food Reliable on Program State the is none but isof reductionthem the regionalofabout the inequality. for initiated basically is program the Last developmentcountry. ofthe that implies which here, regions the economy the program the of plan actions The very a is it though, Even uality of the agricultural activities, agricultural the of uality hardly n re t poed o h etmto o te einl oiy n h cuty te main the country, the in policy regional the of estimation the to proceed to order In Development Economic Ministryof isbythe announced that finalprogram and Thethird
affect he highest stress is put on the investments in infrastructure and support of the small small the of support and infrastructure in investments the on put is stress highest he
is clear from clear is of the country the of s
th e output growth.output e , and it and , the improved
large the s mention,that to important is It . . main focus i focus main
The actions plan is a large set of actions of set large a is plan actions The name of the program, it is highly is it program, the of name
program, it cannot be applied to the regional the to applied be cannot it program,
contains but not least, nine main objectives are presented in the program inmainprogram nine theleast, presented are objectives not but
infrastructural
their monitoring their
Supply of Population in the Azerbaijan Republic (2008 Republic Azerbaijan the in Population of Supply s the s distinguished a
list o list control of the the of control 38 macroeconomic f general gove general f
conditions . The reports of the program suggest that the the that suggest program the of reports The , and provision of proper infrastructure for infrastructure proper of provision and ,
and summarized and the quality of the agricultural the of quality Ivsmns n nrsrcue for infrastructure, in Investments .
policies rnment actions are not distributed across distributed not are actions tool that affects the allocation of of allocationthe affects that tool concentrated on the agricultural the on concentrated
on A i flos f follows it As . the country the policy
and nutrition and
for each field of of field each for
the assessment
scale lands rom the the rom general , and and , , but but , , The The
the the - .
CEU eTD Collection ma government growth. regional the on factors development. of effect the capture specifiedregionalnot are program today.enough clearly, highly is it since effective tool, be to expected is enterprises medium and small the of support the contrast, In investments. low. was competitiveness on focusa but high, was capitalreallocationthe its policy,when regional beginning of in Britainthe Great the of situation a resembles Azerbaijan in policy regional the aspects some in Generally, education improvement technological trigger is receivers. the ofmeasures grant the of selection of process the in covered not is control in invest to decide might firms some advance, in regions the across distributed are grants monetary is loans, regions. other the and city capital the construction ininstance highlyconcentrate h grant the
In order to make an estimation of of estimation an make to order In I hr i a om o institutional for room a is there not does government the that noted also be should t micr a
r R&D or - eevr areas receiver
In order to perform this, I I this, perform to order In kes some kes oeconomic tool that affect that tool oeconomic policy dos not dos policy wih r eteey low extremely are which , d
on the
of roads of
in other other Nvrhls, codn t te eot f h NFES, the of report the to according Nevertheless, . frastructure frastructure
agricultural activities. directlyconsider investments favoured Thi , are believed to raise believedto are ,
Even though, though, Even s situation questions the effectiveness of the construction construction the of effectiveness the questions situation s
n h regions the in The second second The
netet ad icutd on on loans discounted and investments
by the regional economics literature. literature. economics regional by the framework s the business allocation decision allocation business the s ul a build like investments in investments like of effectiveness 39
any
r absent or
in the framework of the state program the the program state the of framework the in
model that estimates the effect of different different of effect the estimates that model most . diversification in the regions; and, in factin and, regions; the in diversification
improvement; the executive bodies of the the of bodies executive the improvement; uh measures Such a volume
used n th in the regional policy, I I policy, regional the
employ any measures that would would that measures any employ tool, provision o provision tool, ecology and information and ecology
of business cooperation between businesscooperation of faeok f h program. the of framework e
ol b ivsmns in investments be could
t mle ta the that implies It as well as In addition to that Inaddition to f the discounted discounted the f
h industrial the the regional regional the am trying to to trying am . Since the the Since . , they do do they , , it , an an ,
CEU eTD Collection earlier. the of report any in captured not are thus, and, insignificant, and low are trainings in investments the areas. that mentioned the of welfare the improve but productivity, the affect directly not Theestimationisin conducted the state p state rogram. It can be also confirmed by the table of measures of table the by confirmed also be can It rogram.
followingchapter. 40
It should be also also be should It presented
CEU eTD Collection ofassessment extende The analysis. the of model core the is factors contributing other through capita per output regional disparities regional of assessment the for is variable dependent former The region. each for capitaeachforwageaverage realregionalper and are region indicators output regions. These to trying indescribed for conducted development, regional the for body responsible currently is which Azerbaijan, of Development Economic of Ministry the to According country. the for performed regionalthe Azerbaijan.inpolicy enterprises Besides, investments. As explains sametime, the at o effects the captures the through Azerbaijan
t was it h model The c The the estimate to is chapter this of aim The control
through the NFSA, and the effect of effect the and NFSA, the through hw i te rvos hpe, h most the chapter, previous the in shown d model is the core model with model core the ismodel d chapter two, but do but not two, chapter
ret siain is estimation urrent the country the importancepotentiallyof other influencing
h fcos ht r afcig the affecting are that factors the peetd eo wr cntutd olwn te theories the following constructed were below presented s f the tools used in the framework of the regional policy of Azerbaijan, and, and, Azerbaijan, of policy regional the of framework the in used tools the f h government the
C oe ta epan te einl inequality regional the explains that model
and/or and/or HAPTER the
parameters available the to
h first the strictlyto them adhere 4 .
E rvds icutd on msl t sal n medium and small to mostly loans discounted provides STIMATIONOFMOD THE , and is of primary interest primary of is and ,
which an uniaie nlss f the of analysis quantitative
41 used broadly most the additional explanatory variable, which allows for for allows which variable, explanatoryadditional
contribute to the regionalthe to contribute general those investments those
growth and development indicators in the the in indicators development and growth
fetvns o te einl oiy in policy regional the of effectiveness public.
sd tools used factor. . In order to make to In order .
. The model where I explain explain I where model The . is crucial for the analysis of of analysis the for crucial is there are there of the regional policy are are policy regional the of EL n h country the in one one
growth in economic literature literature economic in the regional no simil no
estimation, I am I estimation,
in the country. country. inthe and empirics empirics and Te model The . inequality ar stud ar ies CEU eTD Collection explanation. particular analyses and inshareofagriculture activities total the economic region.of the wort of effect the the In years. exploitation effect haveeconomic positive to expected fixed into investmentsare theattributable itnotAt is same capitalthat the to year’s time, growth. operational following the in reflected be to likely more are investments enterprises’ medium reas this For arranged. and initiated be to time some need which of activities loansis year’sdiscounted discounted capital observations S to expected wage estimation form extended model this econd h checking h rather than try than rather wih s iie it lre n mdu ivsmns n sal netet, and investments, small and investments medium and large into divided is which , ly The selection of the explanatory variables is based on the previous economic researc economic previous the on based is variables explanatory the of selection The The Besides, ,
the has is to to is on poie b te NFES the by provided loans explanatory . the economic the ad n h ogig einl policy regional ongoing the on and , e lgty ifrn fo the from different slightly be
aa on data a . In the framework of the current analysis, the economic structure refers to the the to refers structure economic the analysis, current the of framework the In . here
check I present a supplementary model with a real wage as a as wage real a with model supplementary a present I m ain form and does andform ain
ing stood first twofold: is
if there is any correlation between the between correlation any is there if
The diinl varia additional
to find sources of of findsources to variables
extended model extended simple structure structure
first explanatory variable, explanatory first : these loans mostly go to the small and medium enterprises, the mediumthe enterprises, smalland the to mostly loansgo these : in the core model core the in in each region eachin ly
not have an not , the main rationale to perform the supplementary model supplementary the perform to rationale main the , ble
, in addition to the factors stated above, I I above, stated factors the to addition in , the variation of the regional the variation of the n h peiu year. previous the in
both during the construction year and in the following following inthe and yearconstruction duringthe both are core
42 lacking
extended
, which is suggested by some literature and is and literature some by suggested is which , oe wt the with model , and the impact of each variable has its its has variable each of impact the and ,
are education, total investments total education, are education for the the for version
regional
time period used for real wage wage real for used period time The reason to include previous previous include to reason The , can affect the growth through through growth the affect can , . The reason not to perform to not The reason regional real wage real policy tools and the real real the and tools policy dependent variable dependent
upt e capita. per output on, the small and and small the on, . The results The also also
into fixed into include ;
and and are are an an h
CEU eTD Collection and investmentsdiscountedloansgrowth, and growth. and program development regional government the despite down slowing is regions the of development that and growth between correlation negative not do stimulations the inefficiency, in mostly development regional Fan and Zhang of work the in seen was it As regions. the in growth the of stimulation the for uses government dependsandfurther theirdevelopment time, accumulation capital formation,or investments beinmodels.whichareas, controlledneedsfor to the innon lowerincomparablyishigher thefirst chapter, numbereducationentities theof the education higher the of terms in regions the across variation 2001) two (Gylfason, these between correlation positive the inarguable; here. captured be is to growth expected and education between relationship positive The capital. human of formation the insignificant resultinsignificant The The . t the At the
effects of the of effects et xlntr variable explanatory next capital fixed into
through
ae f nfiin dsrbto o te tmlto pcae, n, due and, packages, stimulation the of distribution inefficient of case (Fan, 2006) (Fan,
, same time, the positive correlation is expected between both construction construction both between expected is correlation positive the time, same Aa B Kugr 2000) Krueger, B. (Alan
are estimated to be significant forbe regionalthe thenthe significant development, to estimated are
, and, moreover, and, , the influx of influx the s would s next explanatory variable explanatory next , the government stimulation government the , , are following the neo the following are ,
impl h efc o te dcto o lcl cnmc rwh is growth economic local on education the of effect The
capital ind capital y improve the regional productivity regional the improve
mainly , that the regions are developed to their steady their to developed are regionsthe that can sometimes can icutd loans discounted discounted loans discounted
, eed on 43 Pep, 1966) (Phelps,
technologicalimprove affects the regional development. At the same same the At development. regional the affects s - , classical growth theory. If the investments the If theory. classicalgrowth
large and medium investments medium and large bring negative bring s are s
,
al opportuni al represent nte urn models current the in is
not necessarily significant necessarily not .
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oe econo some tool, which the the which tool, ol imply would - . It happens It . state levels, state
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CEU eTD Collection the Following cities. and/or regions other of number a contains region economic quantitativ the for further divided are one chapter 4.1. production relevant more is capita per production the with correlated highly be to expected regions. the in wage real the on effect any has program capita. effec their to similar very is model, supplementary the in estimated implicationsmodel,it canhaveimportant for regionalcountry. the thepolicy of in that than less typically is parts urbandeveloped more as returns different bring activities economic of types Different locality. each for common activities of 2004) economic region the is model Data Description Data . The . The reason why I am including the supplementary model is to check if the regional policy checkif policy regional the is modelincludingto supplementary the am TheI reasonwhy The average on variables explanatory the of effect The core extended the in included be to going is that variable explanatory additional The also
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is
with higher output per capita the share of employmentof share capitathe per output higherwith sometimes h less the can explain the regional disparity regional theexplaincan a certai
an developed variable, This output. regional the on effect n eivd o be to believed
increase in the regional average earnings. Nevertheless, Nevertheless, earnings. average regional the in increase (Uwe Blien, 2001) Blien, (Uwe o h cret study current the to 44
areas aayi. codn t te AzStat the to According analysis. e .
a The increase in increase The f hs assumptio this If
otiuig atr by factor contributing
real or through the differences in kinds kinds in differences the through
Cziraky since it reflects exactly the the exactly reflects it since wage per region, which is is which region, per wage
o rgoa otu per output regional on t production n finds support in the the in support finds n
et all et
productivity (Dario Cziraky, Cziraky, (Dario break some regional regional some
in agriculture
per
structure of of structure -
down of of down capita each , In .
is is
CEU eTD Collection (N=63 2011 to 2006 from year 6 of period time the for observations yearly with regions 63 for data panel the contains estimation the for used inAppendixseen 1. e The analysis. quantitative the by considered still are amount, small a inif even country, the from investments get that areas The analysis. the to due and, Armenia; estimate model.usedto the observations number of theincreases which eachforregion/city, is taken data the committee, the
11 10 conomic region conomic
9 8 7 6 5 4 3 2 1
Total Nakhchivan Dakhlikh Shirvan Kalbajar Qarabagh Yukhari Aran Guba Lankaran Shaki Ganja Absheron Baku Economic region For the core model with the regional productivity as productivity regional the with model core the For Author’sSource: work own Table As
- - - city Khachmaz Zagatal xlie bfr, oe ra d nt e ay netet de o cuain by occupation to due investments any get not do areas some before, explained Gazakh - Lachin
6
Economicbreakdownregions
can be seen in Table Table in seen be can
the region areas in the Number of absence of absence
18 11 73 4 7 5 6 6 3 1 8 4
areas included Number of
variation in explanatory variables, they are excluded from from excluded are they variables, explanatory in variation 6 , whereas more whereas ,
63 18 11
number of regions and/or cities contained in each in contained cities and/or regions of number 1 4 1 7 5 6 6 3 1 45
, T=6, NT=378). For the supplementary model model supplementary the For NT=378). T=6, ,
areas excluded Number of
a
10 detailed description of regions can be be can regions of description detailed 7 0 3 0 0 0 0 0 0 0 0
an
explained variable, the database database the variable, explained
CEU eTD Collection 3 measuredisdatabasemanats. thousandsare loansin discounted information. statisticalThe of breakdown the provided exclusively NFESthe res current the for Nevertheless, breakdown. further their without regions economic the by NFES the of reports annual f loans provided discounted of amounts yearly The manats. thousands in measured are capital fixed in investments All capital. construction medium yearThepercentage.base is 2004 Fun Monetary International the from taken is inflation for data yearly The inflation. the to adjusted inpricesmeasured current thein localmanats. currency, ( capita per output regional the Az the from taken are region, per investments small and region, isandextended time span to as wage real regional the with
The wagereal is equalto the nominal wage divided theto inflationchange from the base level. d database. Inflation is an average yearly consumer price index change, measured in in measured change, index price consumer yearly average an is Inflation database. d The large and medium and large The the from taken was wage nominal the wage, calculate real the to Inorder f capita per output on data yearly The netet i fxd aia made capital fixed in investments investments per region ( region per investments
available for available 7
or each region in previous year ( year previous in region each or yearsfrom200 construction an
3 out_pc explained variable, the number of regions remains unchanged unchanged remains regions of number the variable, explained .
inv ad h aeae el ae e rgo ( region per wage real average the and ) _s
the general public. In those reports the data is grouped grouped is data the reports those In public. general the ) show the show )
investments per region ( region per investments 5 until 2011 (N=63, T=7 until 5 (N=63, 2011 or each region, large and medium investments per per investments medium and large region, each or
46 y oh p both by
same about the small the about same
bi ad rvt sector private and ublic dloans_1 Stat inv_lm . The dependent variables, dependent The . ,NT= ) are not available in the the availablein not are ) ) show the show ) 441 investments in fixed in investments ). AzStat
ad small and , r wage large and and large
and then andthen ), are are ), earch earch CEU eTD Collection explanatory considering estimation estimated and observations estimation 4 is smallinvestments,43% Baku. to directed In investments. of types other for case the not iswhich regions, the across distributed loansare discounted the of mamillion 1 is regions makesmillionsmallinvestments 3.8 andmanats, up average ofloansfortheprovided discounted regional of average the manats, million 26.4 to reduces investments medium and large regional capita the without them calculate we if significantly change values same The year. per manats million 1.4 is loans discounted provided the of value average the and year, per manats million 6.8 constitutes investments small regional of amount yea per manats million 113.9 of level average an have construction, to directed investments, regional medium and large The findings. the of interpretation the in used be can it is butinitialThe data by calculated thefromvaluestaken are Azauthor, thethe percentage. into converted is ratio The region. each for employees of number total the to sector .2. The methodology and themethodologyThemodel and h data The summarize To t ( structure variable, last The
the fixed effects are applied to the model. Usage of the fixed effects model allows for model allows fixedeffects the of model.Usage the to applied are effects fixed the ehd s the is method
variable h region the the base case of large and medium investments, 76% falls on Baku, and in and Baku, fallson 76% investments,medium and large of case s over years over s ecie i te previous the in described he description of the data, it isishe itas itway lookingdescriptionthe worthdata, ofdistributed the at - nats. From the aforementioned it can be concluded that, on average, 80% 80% average, on that, concluded be can it aforementioned the From nats. pcfc fet ta ae esset in persistent are that effects specific OLS OLS a ier prxmto. n re t ipoe the improve to order In approximation. linear . regression Intuitively, the fixed effects model controls the historical builthistorical the modelcontrols fixedeffects the Intuitively, str
uc ), is the ratio of the employees working in agricultural agricultural in working employees the of ratio the is ), which ,
47
data panel a in organized is section
minimizes squared differences between real real between differences squared minimizes l city, Baku. In this case, the average of of average the case, this In Baku. city, l h vle o al eedn and dependent all of values the Stat
r. The average average The r. ult of quality .
the
set case of of case The .
the the -
CEU eTD Collection highest the Economically, variables. explanatory the of variation the by explained is capita per significance estimatedbysame thetechnique, 4 yearandrespectively. variable, dependent corresponding the on variable explanatory each of effect estimated the for stand s=1,2,…,6, for result, supplementaryAsmodelathe isfollows: as history but p.149) Brakman, 2011, factor other any by explained be cannot diversity regional of part some r in notion common very a is It areas. geographical the to inherent ins .3. The resultsThe ofestimation s niiae, n h cr mdl l cnrle vrals r sgiiat t 1% at significant are variables controlled all model core the in anticipated, As Th modelsabove Inpresented the its in one core the as pattern same the follows model supplementary the And out_pc modelTheisfollows:extended as mainmodelThe e output of th of output e level. The R level.The it
= β = out_pc rwage 0
+ β + the parameter u parameter the
it 1 . it
to be estimated to * siain speetd in presented is estimation e
= β = - = β = edu squared is 9 is squared 0 0
it
+ β + + β +
+ β + 1 1 which is f iswhich * 2 * * edu edu
it inv_lm stand for stand 2 the parameter β parameter the it it %, which implies that 9 that implieswhich %,
has the followinghasform:the + β + + β +
ixed 2 it 2 *
* +
β inv_lm inv_lm
the 48 3 effects OLSregressioneffects *
inv_s
errors, and the indexesand the errors,
it it
Appendix 2 of this thesis. All models are are models All thesis. this of 2 Appendix 0
+ + standsintercept, thefor it β β + β + 3 3 * *
inv_s inv_s 4 *
dloans 2
% of variation in regional output output inregional variation of % it it + β + + β + _1 4 4 * * .
it dloans
dloans that economics, egional + i
β and 5 * _1
_1 the coefficientsthe struc t
stand for region for stand it it
+ u + + u + it
main form main
it it +
u (Steven (Steven it
β s . CEU eTD Collection productivity,thefor and capita more steady their to developed not are regions the growth, the affect positively enough strongly them absorb to potential no have regions the or efficient not either are they welfare, regional today. force in is that isitmanats,10 attributable to production reg all among capita per output average and 28 by output regional the constitutes horizon time whole the over output regional average the calculate we man million is Baku, that investmentslargeof26.4 mediumregionalwithout and The values. average amount values average misleading. be might view first the low, thousandsone re theincreases entityeducation higher one of establishment out regional the on effect The result of the estimation has a very high anal high very a has estimation the of result The increase loans discounted and investments small of manats million one time same the At , respectively. Since the average amount of small investments in regions is 3.8 million 3.8 is ininvestmentsregions small of amount average the Sincerespectively. , 2 l influx l ats, is on average predicted to increase to predicted average on is ats, . 5
% the investments,eventhough for As average.manats on of investments of . From . of . From the the From . the As the large the As averageregional o they side ne put per capita is captured by captured is capita per put 6 might other side, other
8 . that can bring more close to reality explanation of the estimated estimated the of explanation reality to close more bring can that 2 2.6 the neo the
manats or
and medium and
manats, respectively. In respectively. manats, needsome - output classical growth theory classicalgrowth ions other than Baku, it means 2 means it Baku, than other ions the regions do not need not do regions the
In order to interpret the investments I am using the the using am I investments the interpret to order In 8 . 1 % of . additional 49
investments have investments
regional output per capita by 3 by capita per output regional production
education. Holding education.
ytical effect on the investments policy investments the on effect ytical trigger for their trigger
a gional output per capita by just over over just bycapita per output gional
percentage terms, compared to the to compared terms, percentage
per capitain per regions. suggests that if discounted loans ifdiscounted that suggests
the large construction investments construction large low
estimated estimated without Baku without est better - . state levels state 1
effectiveness on the the on effectiveness
other factors fixed, factors other and
development. coefficients are coefficientsare 6 2 . . 3 7
, this value this ,
percent percent manats.
and need and
of of If If
CEU eTD Collection 2. Appndix of 4 Table in shown are results The again. model the estimate and wage real year’s previous the include fromAppendix beTableof 2, 3 seen autocorrelation. Durbin the estimations both by output regional the increases area the stimula area. the for income higher and business observations of majority the that fact can byIt bemanats. the per explainedincreases capita by 32 percentage point regionalthe output precise, more be To capita. per output a model, the to economicallysignific capita per output regional the increase this and investments discount small of manats million one coefficients, the for As level. significance 5% is structure whereas 1%, at significant statistically remain loans discounted the increas model to not structure the does is similar to to similar tions through the discountedtheloans, mostlythrough whichtionsto agricultural thego sector. In the supplementary model, the results are very different from the core model. As it can can it As model. core the from different very are results the model, supplementary the In in entity one of establishment and one, previous the to similar is education of result The the of Inclusion thesis. the to 1 Apendix of 2 Table in presented is model extended The
ed loansincreaseregiona the ed types. It means that higher share of employment in agriculture is, generally, more job more generally, is, agriculture in employment of share higher that means It types.
has agriculture in employment of share higher h etmto of estimation the ant While the Durbin Watson is 2.0 in the corrected model, t model, corrected the in 2.0 is Watson Durbin the While , but is but st , - Watson statistics is around 2, which implies the absence of the the of absence the implies which 2, around is statistics Watson atisticallyonlysignificant at This result is consistent with the direction of the regional regional the of direction the with consistent is result This h cr mdl Lre netet of investments Large model. core the l output per capita by 28 and 82 and 28 capitaby per loutput the mode the
e the R the e in the sample are regions, wh regions, are sample the in in the same way by 32 manats 32 by way same the in just above one thousand one above just n nrae of increase an - squared. Large and medium investments as well as mediumLargeand investments as assquared. well l suffers from the autocorrelation. For this reason I lfrom suffersautocorrelation.reasonFor thisI the 50
employment in agriculture by one one by agriculture in employment
10% significancelevel 10% a positive effect on the regional the on effect positive
manats. Last but no but Last manats. ich have no large variety in variety large no have ich .5 . Th .
manats, respectivelymanats, e effect of structure is structure of effect e 26 .4
million manats manats million in he findings are are findings he significant at significant
. According . t least, in least, t ;
and and s
CEU eTD Collection level; thus, provided the and, o the of breakdown The people. and government inhabitants. regional re not is and output, regional the on captured is it of effect the significant, and large is it Since output. regional the in investments constructional the model. supplementary inthe that than higher times other. each to contradicting inisregionalforce that policy main The research. af can government the how study, with change real the that suggest model supplementary the Surprisingly investments small that would tool policy regional any no is there Nevertheless, education. and loans discounted from and wage, real the on effect different very significantly hl i mgt ok o t so, look might it While , education does not affect the regional real wage either. either. wage real regional the affect not does education , the from
execution of the of execution os o cm out come not does
the expectations the affect the real wage according to the estimation. the to according wage real the affect r saitcly infcn, u eooial ter fet s o low. too is effect their economically but significant, statistically are By the same token, the token, same theBy usin f h cret eerh s th is research current the of question after the results of results the after In the In explanation
today utput per region is not available for the country on country the for available not is region per utput fect the regional real wage, this question question this wage, real regional the fect government program. government core e eut o te oe n splmnay oes r not are models supplementary and core the of results he . .
The expectation was such that the regional policy has some some has regionalpolicy the that suchwas expectation The of the personal consumption or investments of the local local the of investments or consumption personal the of
model estimation, the effectiveness of the the of effectiveness the estimation, model
is suggested byis modelssuggested estimatedthe only. production
51 the core model, the highest effects were expected expected were effects highest model,the core the wage that is the real the is that wage
The reasons The
in the regions is highly subsidized by the bythe subsidized highlyis regions inthe flected that much on the real wage of of wage real the on much that flected vntog i ol be would it though Even e nlss and analysis
can be connected to connected be can The results of estimation of of estimation of resultsThe income of peop of income
The discounted loans and and loans discounted The is beyond the current current the beyond is effectiveness of the the of effectiveness parameter
important
the le does not does le
a
regional share of of share s
to is
CEU eTD Collection that way It of effect S most the be to believed are enterprises consistent T output. regional on estimationwith ofdata panel pri the variablesof explanatory are programs the of tools The factors. contributing the through output regional the explains that model econometric and, were program the out pointed of tools main the effectiveness, the of estimation the perform to order In transparency 2013 Socio on Program one country. the in inequality regional the of reduction at aim analyzetoday. Theofpurpose research thiswasand theto ongoingestimate policy program P mall investments haveinvestments mall OLICYIMPLICATIONS A was s thereafter . tate tate
explained h aayi o te rga covers program the of analysis The According to the results, the to According R
egional inequality is one of the most outstanding problems in problems outstanding most the of one is inequality egional large p the regions lack the potential to absorb to potential the lack regions the ih h ter o plcmkn, hr te netet i te ml ad medium and small the in investments the where policymaking, of theory the with re the considers that rogram
to be investments in construction and support of the small and medium ente medium and small the of support and construction in investments be to
and , their effect on theireffect , and medium and using the using efficiency - Economic Development of Regions of the Republic of Azerbaijan for 2009 for Azerbaijan of Republic the of Regions of Development Economic he most he much neo
investments is incomparably lower incomparablyis investments approach, and institutional system and monitoring of the programs. programs. the of monitoring and system institutional and approach,
NDCONCLUSIONS fixed effects.
- the stronger effect tha effect stronger effective tool effective classical growth theory i classicaltheory growth both regional growth was estimated. The method of estimation is an an is estimation of method The was estimated. growth regional
of the tools used by the government have government the by used tools the of gional development in the country today country the in development gional effective
is
52 estimated to be to estimated administration,
n ones
large this type of type this mary interest. The technique used is the OLS OLS theis techniqueused The interest. mary
( ntegrated in ntegrated regional Armstrong and Taylor, Taylor, and Armstrong and medium and According to the finding,t the to According
than capital. discounted loans. discounted opnns and components that of the discounted loans. discounted the of that investments. the the The other explanation is is explanation other The Azerbaijani economy economy Azerbaijani economics 2000, page 233) page 2000, , a
which is called called is which
The finding is finding The positive effect effect positive Moreover, t Moreover, effectiveness, effectiveness, here is here
in such a a insuch rprises, s only only
that that he - .
CEU eTD Collection are regional their but growth, regional the influence partially that programs government other some are there reg on FDI the of information the Besides, fallsoil the part on vast the since Azerbaijan, in tool policy regional a as used not are specifically investments FDI the estimated not FDIs,are likevariables,regional level, regionalsome to turn out different. long the and concept, new very a is Azerbaijan in policy that the r affect strongly not does program government with correlated business the of output and consider not Azerbaijan do of lack the to due inefficient where Britain, Great of case the large the of inefficiency ex havepositivecorrelationa with the ldd rm h analysis the from cluded , which was expected expected was which , struct ept te import the Despite the from Apart largeshareofthe measures activity among the regions today; regions the among activity h ifatutr ivsmns ht r nt rnig n sgiiat result significant any bringing not are that investments infrastructure The be more productive in the future. morefuture. beproductive inthe r of ure
a higher output per capita. per output higher a
are not not are economies - einl policy regional
gas sector of the economy, and there is no large variation there (AzStat). (AzStat). large variationthere no is and there economy, ofthe sector gas and medium construction construction medium and regionalproduction provided ne f h rsac, t a sm limitations. some has it research, the of ance competition by the theoretical framework theoretical the by
concentration on concentration
on the regional growth growth regional the on .
hs iiain s h waet since weakest the is limitation This
in the official documentation inofficial the the
regional development. tools, e tools, or technology or early
The
and the larger share of agriculture sector in region region in sector agriculture of share larger the and ional level is not available for the country. the for available not is level ional The other limitationTheis other that
is investment
egional real wage, which which wage, real egional 53 other important finding of the research is that that is research the findingof important other uain has ducation competition attributable to attributableto
investments. This investments. either ugs ta arclue is agriculture that suggest s of the government government the of s
and empirical estimations empirical and
. - and technology and term results might be significantly significantly be might results term a The small investments are effective investmentseffective are small The
the constructionthe works. distinctive effect on the regional regional the on effect distinctive .
For this thesereason,For programs
by the models bythe
argument those due to the lack on the to ofduedata may . Firstly, the regional regional the Firstly,
program The investmen The come
is supported with supported is n regions in .
Nevertheless, Nevertheless, from a . s
The The
successful successful
today are more more are
Finally, Finally, the fact the effect effect wer ts in ts c the an an is is e
CEU eTD Collection in parts crucial international accountable proposed time. over themselves justify and inthe fruitful results returns high bringing not is which construction, on sums t Azerbaijan, In well. as Azerbaijan for helpful be might same the Britain. Great not are investments those that be recommendationsstated are come loans. discounted and investments, invest to development. economy country the on concentrated , perhaps, too large. too perhaps, , s
Secondly, t Firstly, t Generally, Policy rm h itrainl xeine n tertcl framework theoretical and experience international the from , and cannot be considered andprogram cannot separate as, a regionalfor equalizatio
below in the regional growth. growth. regional the in
for the issue of of issue the for practice
It means that the country needs to continue the to needs country meansthe that It In order to fightagainstcountry the In this, order to implications the he that that
the
large e einl oiy f Azerbaijan of policy regional he realization of the policy program. If one combines the cases of Croatia and and Croatia of cases the combines one If program. policy the of realization havehigha potential to , long
institutional framework framework institutional like the case of Ireland, of case the like At the same time, there is no is there time, same the At n medium and
future, the portion falling on the large investments large the on falling portionthe future,
the - wide low. sufficiently h mny ih hv been have might money The regional inequality regional
growth Nevertheless, there is a certain room for improve for room certain a is there Nevertheless, The most suggested tools by the estimation are small small are estimation the by tools suggested most The investments need to be reconsidered. be to need investments
wih s a is which , strong, as similar results were seen in the practice the in seen were results similar as strong,
improve can be improved be can suggests that the institutional system is one of the the of one is system institutional the that suggests 54
or regional growth regional or the clear changed the approach of investments,and ofapproachchangedthe has a significant effect on the regional regional the on effect significant a has oml ae f development of pace normal regional evidence that these investments will will investments these that evidence yet implementation of the implementationthe of
. .
pn on spent There is no single entity that that entity single no is There vn f t s xetd o bring to expected is it if Even productivity. he government spends large large spends government he . Nevertheless,
some today It is not surprising not is It ad h main the and ,
te measure other n . is
program and and program
the highest the
successful successful ment that that ment o every for of is s
CEU eTD Collection firstlong term regions.the to in regions in entities educational higher of more of establishment An regionaldevelopment regionalinequalitytime. over of application with policy regional ongoing the of of implementation put imply would It region. each for approach individual is since2004 infrastructure in of case in programs the way and performanceapproach the regionalthe policy. performance flexibility.high econ in regi implementationthe of plan. action Ireland,
formation of regional human capital human regional of formation not
(Teresa Curristine, 2007) Curristine, (Teresa omic environment, and have more individual approach to each region, which would be a a be would which region, each to approach individual more have and environment, omic strong Last but not least not but Last recommendation, third the involve also could improvement institutional The he/ she can conclude conclude can she
approach
The separate administrative body could focus more on the planning and and planning the on more focus could body administrative separate The enough. innovation Focus on technological improvement is also a part of this recommendation this of part a is also improvementtechnological on Focus
the It is well It a .
. It . measures, Adaptationthis of h A the , a higher focus on the on focus higher a ,
park canbefarfrom park somewhere establishedthe is a very important important very a is onal policy. policy. onal ir
in ge cnetain n the on concentration igher
that inefficiency. - the regions the . with known fact that fact that known It helps to evaluate the efficiency of of efficiency the evaluate to helps It
and the some decentralization so that the goals are stated in a clearer clearer ina stated goalsare the that so decentralization some , thereby, , institutional framework institutional At the same time, it could be timely adjusting for changes changes for adjusting be timely could it time, same the At
as well as as well as ; micro
A large amount of monetary sums sums monetary of amount large A and factor
, according to to according , a higher regional independency. regional higher a 55 public efficiency is believed to get improvedget publicbelieved with isto efficiency - economic tool economictool human capital formation capital human
in
of all aspects of the the of aspects all of these attract fiiny would efficiency
ting changes ion of ion the findings, the
is as much important as the proper proper the as important much as is
agt i rsls ahr hn just than rather results in targets is worth isworth
human capital from the capital capital the from capital human
has a potential to reduce the the reduce to potential a has has a has all spending all applying policymaking including policymaking
good
up to the today to up
capital, and that would capital, that and can be crucial for the the for crucial be can also also have been have
potential to result to potential The continuation continuation The
allow for more more for allow for the country. the for , and redesign redesign and ,
invested invested ireffect .
In the the In
the the
CEU eTD Collection and,thus, and education recommendation on education The education, and trainings time. same the at country abroad, from specialist of attraction capital competitiveness and development the for research the in earlier presented c ertainly differences
eevs o such for reserves
bring requires a separate individualrequires separate a research. the
h growth the
of educational environment educational of omto o te ua cptl in capital human the of formation ol be would technological competitiveness of the regions the of competitiveness technological they are too low, and do not form not do and low, too are they Even though Even netet like investments
o rae long a create to s atrs y h model the by captures is
suggest that the technological advantage is drastically important important drasticallyis advantage technologicalthe that suggest
which has high chances to develop regions and the whole whole the and regions develop to chances high has which
the government has some insignificant investments in the inthe investments insignificant some hasgovernment the
f n economy an of are buyouts, patents - term 56
shown in Chapter one, whereas one, Chapter in shown
policy
the
regions. plan n hpe four chapter in . large
The country possesses possesses country The investments in R&D, and initial initial and R&D, in investments . This ec This iig at aiming
human capital in the regions. the in capital human Both theories and empirics empirics and theories Both onomic problem is broad broad is problem onomic
improve Te very The .
a
high effect of of effect high et of ment sufficient strong strong
the the
CEU eTD Collection quantitativeanalysis 11 10 5 4 3 2 1 6 5 4 3 2 1 9 8 7 6 5 4 3 2 1 3 2 1 1 1 6
Shabran Lankaran Yardimly Masally Lerik Jalilabad Astara Shaki Zagatala Oguz Gabala Gakh Balakan Naftalan Tovuz Shamkir Samukh Gazakh Goygol Goranboy Gadabay Dashkasan Aghstafa Ganja Khyzi Absheron Sumgayit Bakucity Breakdown of the economic regions and information about their inclusion in the the in inclusion their about information and regions economic the of Breakdown
Guba Ganja Shaki Lankaraneconomic region Absheroneconomic region - Khachmazeconomic region - - Zagataleconomic region Gazakheconomic region Bakucity A PPENDIX included included included included included included included included included included included included included included included included included included included included included included included included included included included included
57
1
CEU eTD Collection
18 17 16 15 14 13 12 11 10
2 1 4 3 2 1 7 6 5 4 3 2 1 9 8 7 6 5 4 3 2 1 5 4 3 2 4 3
Shamakhy Gobustan Ismayilly Aghsu Gubadly Zangilan Lachin Kalbajar Fuzuli Jabrail Shusha Khojaly Khojavand Tartar Aghdam Yevlakh Mingechevir Shirvan Zardab Ujar Salyan Sabirabad Saatly Neftchala Kurdamir Imishli Hajigabul Goychay Bilasuvar Barda Beylagan Agdash Agdjabadi Siyazan Gusar Guba Khachmaz
YukhariKarabakh economic region Kalbajar DakhlikShirvan economic region Aran - Lachin economicLachinregion
economicregion included included included included included included included included included included included included included included included included included included included excluded excluded included excluded included included included included included included included included included included included included included included 58
CEU eTD Collection
8 7 6 5 4 3 2 1
Kengerli Sharur Shahbuz Sadarak Ordubad Julfa Babek Nakhchivan
Nakhchivaneconomic region
excluded excluded excluded excluded excluded excluded excluded included 59
CEU eTD Collection Table1 Prob(F F Log likelihood Sum squaredresid S.E.of regression AdjustedR R Cross Totalpanel (unbalanced)observations: 377 Cross Periods included:6 Sample:2006 2011 Date:05/30/13 Time: 20:53 Method:Panel Least Squares DependentVariable: OUT_PC - - statistic squared - - section fixed(dummy variables) sectionsincluded: 63 DLOANS_1 - statistic) Variable INV_LM
INV_S
Estimated Core ModelCoreEstimated FixedbyOrdinarySquaresLeast EDU
- C squared
Coefficient
- 1.45E+08 EffectsSpecification 0.000000 57.64769 2958.697 683.2774 0.908621 0.924661 183.2383 0.082633 1009.024 0.027949 0.001240
Durbin Hannan Schwarzcriterion Akaikeinfo criterion S.D.dependent var Meandependent var
Std.Error 259.3619 0.015747 285.4134 0.002471 0.000308
- Watson - A
Quinncriter. PPENDIX
60 stat
3.535307 11.30919 4.025988 0.706497 5.247484 t -
Statistic
2
1.764280 16.32883 16.75028 16.05144 2260.345 1601.771 0.0005 0.0000 0.0001 0.4804 0.0000 Prob.
CEU eTD Collection Table2 Prob(F F Log likelihood Sum squaredresid S.E.of regression AdjustedR R Cross Totalpanel (unbalanced)observations: 371 Cross Periods included:6 Sample:2006 2011 Date:05/30/13 Time: 21:05 Method:Panel Least Squares DependentVariable: OUT_PC - - statistic squared - - sectionsincluded: 62 section fixed(dummy DLOANS_1 - statistic) Variable INV_LM STRUC
INV_S
Estimated EDU
- C squared
Extended
Coefficient
variables) - - 1.43E+08 EffectsSpecification 0.000000 57.14747 2912.051 685.2906 0.909219 0.925412 28.44165 32.25905 0.082493 1023.830 0.028080 0.001217
Core Model Core byOrdinarySquaresFixed Least
ependentvar Durbin Hannan Schwarzcriterion Akaikeinfo criterion S.D.dependent var Meand
Std.Error 286.2977 17.22537 0.015807 286.3577 0.002480 0.000309
- Watsonstat
-
Quinncriter.
61
-
0.099343 1.872764 5.218735 3.575353 11.32415 3.935676 t -
Statistic
1.785279 16.34047 16.76681 16.05957 2274.452 1618.556 0.9209 0.0621 0.0000 0.0004 0.0000 0.0001 Prob.
CEU eTD Collection Table3 Prob(F F Log likelihood Sum squaredresid S.E.of regression AdjustedR R Cross Totalpanel (unbalanced)observations: 436 Cross Periods included:7 Sample:2005 2011 Date:05/30/13 Time: 21:48 Method:Panel Least Squares DependentVariable: RWAGE - - statistic squared - - sectionsincluded: 63 section fixed(dummy variables) DLOANS_1 - statistic) INV_SM Variable INV_LM
Estimated EDU
- C squared
Supplementary
Coefficient
- EffectsSpecification 0.000000 5.303498 2020.259 270224.0 27.06131 0.395019 0.486809 90.78799 0.003282 3.326390 0.000278
3.11E
- 05
Model byOrdinarySquaresFixed ModelLeast Durbin Hannan Schwarzcriterion Akaikeinfo criterion S.D.dependent var Meandependent var
Std.Error 6.262756 0.000589 7.260251 1.12E 9.14E
- Watsonstat -
Quinncriter. - - 05 05
62
14.49649 5.568642 0.458165 2.768078 3.035903 t -
Statistic
0.458157 9.821871 10.20119 9.574581 34.79188 103.4430 0.0000 0.0000 0.6471 0.0059 0.0026 Prob.
CEU eTD Collection laggedreal wage 4 Table Prob(F F Log likelihood Sum squaredresid S.E.of regression AdjustedR R Cross Totalpanel (unbalanced)observations: 436 Cross Periods included:7 Sample:2005 2011 Date:05/31/13 Time: 12:35 Method:Panel Least Squares DependentVariable: RWAGE - - statistic squared - - section fixed(dummy variables) sectionsincluded: 63 DLOANS_1 - RWAGE_1 statistic) INV_SM Variable INV_LM
Estimated Estimated EDU
- C squared
Supplementary
Coefficient
- - EffectsSpecification 0.000000 110.0443 1501.617 25032.12 8.247549 0.943805 0.952461 21.02106 0.000422 0.764245 0.897001
8.21E 3.01E
- - 07 05
Durbin Hannan Schwarzcriterion Akaikeinfo criterion S.D.dependent var Meandependent var Model by Fixed Ordinary Least Squares Least Ordinary Fixed by Model
Std.Error 2.234623 0.000186 2.213775 0.014940 3.46E 2.82E
- Watsonstat -
Quinncriter. - - 06 05
63
-
2.271767 0.345222 0.236947 1.070423 60.03827 9.406979 t -
Statistic
2.005484 7.451058 7.836039 7.200076 34.79188 103.4430 0.0237 0.7301 0.8128 0.2851 0.0000 0.0000 Prob.
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