The effect of bilateral foreign trade on growth: Azerbaijan-Turkey case

Foreign trade activities are not only an important income/expenditure item for national economies, but also a basic economic activity component and a dominant macroeconomic dynamic. For this reason, foreign trade volume is also an important macroeconomic variable. As a matter of fact, foreign trade volume and all other activities related to foreign trade have the potential to seriously affect the macroeconomic performance of countries. In this study, it is aimed to analyze the possible effects of the foreign trade volume between Azerbaijan and Turkey on the growth of Azerbaijan. For this purpose, Least Squares time series regression method was used as the empirical method. As a result, it has been determined that the foreign trade between Turkey and Azerbaijan has a statistically significant and positive effect on the economic growth of Azerbaijan. In addition, it was found that the current account deficit, total workforce level, population growth rate and real interest rate had a positive effect on the growth of Azerbaijan, and a statistically significant relationship could not be determined between foreign direct investments and the growth of Azerbaijan.