Page 119 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE

“investment to fixed capital”. According to definition, investments to

fixed capital consist of total sum of expenditures expended for building
and construction works, purchasing and installation machinery and

equipment which installation is required or not required and included or
not included in estimate of buildings and establishments, purchasing

plough and productive animals, planting perennial plants and forest

belts, realization of design and survey works and other works
(Azerbaijan statistical indexes, 2010: 826). At the same time in the

Investment Law this definition was given to capital investment as well.
This document indicates that “expenditure directed to creation of the

funds and support of reproduction or is part of significant improvement

process can be considered as capital expenditure” [Law on investment
activity, 1995: article 1]. According to unique Azerbaijan budgetary

classification capital expenditure and fixed assets are differentiated
(Decree on Unique budgetary classification of Azerbaijan Republic,

2004). The state budget of Azerbaijan Republic uses both wordings
capital expenditure and fixed capital investments. While in state budget

capital expenditures include only basic repair expenditures, the unique

classification treats the capital expenditures as internal part of total
investments. This approach was also applied in Law on budgetary

system. Thus, according to law, purchase of the assets, capital
expenditures and acquisition of the shares are defined as internal parts of

investments [Law on Budgetary system, 2002: article 10.1.2]. In our
opinion, application of different definition in this area results in

contradictions. Therefore, Azerbaijan State Statistical Committee,

Ministry of Finance and Ministry of Economic Development should do

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