ESTIMATION OF TRADE AND ECONOMIC RELATIONS BETWEEN THE KINGDOM OF SAUDI ARABIA AND AZERBAIJAN
Topicality.Trade is the most important tool of the world economy in terms of building ties between countries, strengthening their interaction in the international exchange of goods, services and intellectual labor products.
Aim and tasks. The purpose of the article is to estimate trade and economic relations between the Kingdom of Saudi Arabia and Azerbaijan, to prove having correlations between basic economic variables.
Research results.The macro, micro and institutional factors affecting trade are initially classified and in separately explained in the article. Moreover, all economic indicators influencing exports have been analyzed in detail. The international experience on the estimation of foreign trade potential has been then investigated, it is pointed out that there are several models considering available, but the most suitable for research is the gravity model. The essence of the gravitational model is explained and the economic literature is studied to determine its application mechanism. On the basis of the gravity model, the trade relations of Saudi Arabia and Azerbaijan have been estimated by the method of the least squares of econometrics. Thus, two models have been set up initially with the variables of export of Saudi Arabia and Azerbaijan. One of variables is real exchange rate and this variable for each country has been calculated and added to the models by years.
Conclusion.The features characterizing the adequacy of these models have been analyzed by using the e-views software package. So that, seasonal adjustment, their stationary, heteroschedasticity/homoscedasticity, the ratio of determination, autocorrelation have been analyzed. The models have been adjusted accordingly depending on the test results. The results have been interpreted on the basis of coefficients and their economic essence has been analyzed. It has been proved that there are positive trade correlations between two countries. In the conclusion, a summary of research has been noted.
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