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Yadulla Hasanli, Gunay Rahimli, Fuad Quliyev, Mattia Ferrari: Evaluation of Sectoral
Foreign Trade Elasticities of Azerbaijan

responses to price changes were likely weaker due to limited foreign trade relations.
Furthermore, as highlighted by Ahmad, S.; Montgomery, C.; Schreiber, S. (2021) and
other studies, elasticities generally increase with higher sectoral disaggregation, which
aligns with the higher values observed in our analysis. Overall, the estimated
elasticities reveal notable differences across the oil, non-oil, and service sectors,
providing valuable insights into the responsiveness of producers and consumers to
price changes and trade opportunities. These findings can serve as an empirical basis
for policymakers to design trade and production policies tailored to sector-specific
characteristics.

CONCLUSIONS
In this study, Armington and CET elasticities for the oil, non-oil, and service sectors
of the Azerbaijani economy were estimated using the Marquardt method in the
Mathcad software package. This represents the first sectoral-level assessment for
Azerbaijan and the first application of this method in the literature. The results provide
important information on the foreign trade potential of the Azerbaijani economy and
can be utilized in future trade and general equilibrium modeling. The methodology
employed also allows estimation in cases where price statistics are unavailable,
potentially facilitating similar assessments for other countries.

Conducting evaluations at a more disaggregated level and for countries with
comparable economies, such as other oil-rich nations, and investigating the sources
of observed differences, constitute promising directions for future research.

Author Contributions:
Conceptualization: Yadulla Hasanli; Formal analysis: Yadulla Hasanli, Gunay
Rahimli, Mattia Ferrari; Methodology: Yadulla Hasanli; Software: Yadulla Hasanli,
Gunay Rahimli, Fuad Quliyev; Writing – original draft: Gunay Rahimli; Writing –
review & editing: Fuad Quliyev, Mattia Ferrari

Funding: The presented study has not received any funding from any agency/
organization.

Data availability statement: No new data were generated in this study.

Conflicts of Interest: The authors declare no competing interests.

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