Page 40 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.82, # 1, 2025, pp. 36-51

A growing body of research has examined the dynamics of economic expansion in
Azerbaijan, focusing on various structural and policy-related dimensions. Rahimov
(2024) investigates the relationship between the Producer Price Index (PPI) and
Consumer Price Index (CPI) through wavelet analysis, shedding light on inflation
dynamics and their broader implications for economic performance. His findings
suggest that fluctuations in producer prices can be a significant early indicator of
consumer price trends, which in turn influence economic stability and growth.
Infrastructure development is also highlighted as a key growth driver. Mahmudov
(2023), using the ARDL bounds testing approach, demonstrates that improvements in
transportation infrastructure have a statistically significant impact on GDP growth.
His study underscores the necessity of targeted investments in logistics and
connectivity to unlock regional economic potential.
Moreover, labor market issues are increasingly recognized as influential factors.
Huseynova (2023) explores the correlation between the gender pay gap and GDP
growth in Azerbaijan, revealing that gender-based income disparities can hinder
inclusive economic progress. Her work supports the argument for inclusive labor
policies as a catalyst for broader economic expansion. Babayev (2020) addresses
diversification challenges in Azerbaijan’s non-oil export sector. His study reveals
structural weaknesses and emphasizes the need for coherent industrial policies to
enhance export competitiveness and reduce dependency on oil revenues—a critical
step toward sustainable growth.
Together, these studies offer a multi-dimensional view of Azerbaijan’s economic
development, providing a foundation for understanding both the opportunities and
constraints shaping its growth trajectory.

METHODOLOGY
This study adopts a mixed-method approach to investigate the perspectives of
economic expansion within the context of Azerbaijan’s national economy,
emphasizing its distinction from economic growth and its implications for small
states. The analysis integrates qualitative and quantitative methods to provide a
comprehensive understanding of economic expansion, drawing on both theoretical
frameworks and empirical data.
First, a qualitative review of economic literature was conducted to establish a
theoretical foundation for economic expansion. Key sources include classical
economic theories (e.g., Solow, 1956; Schumpeter, 1939), endogenous growth models
(e.g., Lucas, 1988; Romer, 1990), and contemporary perspectives on sustainability
and technology (e.g., Stern, 2006; Brynjolfsson & McAfee, 2014). These works were
selected based on their relevance to the study’s focus on innovation, geographical
scope, and structural transformation as drivers of expansion, as opposed to the

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