RELATIONSHIP BETWEEN FOREIGN DIRECT INVESTMENT (FDI) AND GROSS DOMESTIC PRODUCT (GDP): A CASE STUDY FROM AZERBAIJAN
RELATIONSHIP BETWEEN FOREIGN DIRECT INVESTMENT (FDI) AND GROSS DOMESTIC PRODUCT (GDP): A CASE STUDY FROM AZERBAIJAN

Summary/Abstract: With the collapse of the Soviet Union, the necessary legal framework was created in Azerbaijan for the transition to a new economic system, organizational and management structures were formed, antitrust measures were taken in the consumer market, and the widespread use of market tools of economic management began. Large amount foreign direct investment (FDI) has been attracted to the Azerbaijani economy as a result of the economic reforms adopted in recent years, as well as the development of the country's material and technological foundation. This study conducts time series techniques to analyze the impact of foreign direct investment on Gross Domestic Product in Azerbaijan. The research uses annual data from the period 1993-2020. The empirical analysis begins with descriptive statistics. Unit root tests are applied to justify stationary for data. VAR model, Johansen cointegration and Granger causality were applied for empirical analysis. According to the results Johansen cointegration Test, there is a long-term relationship between FDI and GDP. As a result of the Granger causality test, FDI at the 5% significance level is the Granger cause of GDP.

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