The relationship between foreign trade and growth: The case of post-independence Azerbaijan

The aim of this study is to analyze the causality relationship between foreign trade and economic growth of post-independence Azerbaijan. Petroleum and petroleum products are dominant in Azerbaijan‟s exports and their share in total exports is around 90%. The concentration of Azerbaijan on the export of petroleum products has caused it to become dependent on oil prices and more sensitive to fluctuations (risks) in international markets. In order to reduce this dependence, the development of non-oil sectors, especially the agricultural sector, should be ensured. In the study, the causality analysis developed by Toda and Yamamoto (1995) was used to examine the effects of foreign trade on the economic growth of Azerbaijan.