On One Co-Integration Issue of Trade Links of Azerbaijan, Russia, Belarus and Kazakhstan

This article, based on annual data from 1994 to 2018, considers trade and economic processes between Azerbaijan, Russia, Belarus and Kazakhstan through the GDP integration indicators of Azerbaijan and foreign trade turnover with these countries.

The purpose of the research. The purpose of the study is to find cointegration relationships between the studied macroeconomic indicators and correct application of the vector model of error correction to describe the equilibrium relationship between the considered data of intercountry interaction and to develop sound economically informative recommendations in the sphere of intercountry trade and economic interaction.

Materials and methodology. Official statistics of the State Statistics Committee of Azerbaijan, scientific works of scientists-economists on the inter-country integration processes in the post-soviet region are used. Statistical methods of information processing are applied in relation to the empirical analysis of non-stationary time series of the studied statistical data, and correctly tested modern econometric methods and all the necessary econometric testing procedures are used to build co-integration relations and the vector model of error correction taking into account the effects of external shocks. All the calculations are made in Microsoft Excel and Eviews 8 application software packages.

Results. The properties of applying the econometric methodology of studying the statistical relationship between multidimensional nonstationary time series are investigated. For this data, the authors' approach is to use the co-integration tool and the mechanism of vector error correction, which are practically not applicable by economists in Azerbaijan to date. A new specification of the model with respect to the logarithms of the source variables is defined. Based on the minimization of the mean square error, estimates of the model parameters are found. The Granger connection causality is investigated. The Johansen tests are implemented to find the cointegration area, after which the vector error correction model is built, which describes the long-term equilibrium relationship between the studied indicators and the path of returning to the equilibrium trajectory if it deviates from it. When modeling, we used all the necessary statistical procedures required to identify and evaluate the parameters of the model and verify its adequacy and the accuracy of short-term and long-term forecast values by applying Microsoft Excel and Eviews 8 tools.

Conclusion. As a result of the study, econometrically sound recommendations are developed, which allow to conduct dynamic analyzes for effective state regulation of export-import operations between the four countries in order to balance the trade and improve the relevant inclusive parameters of the long-term sustainable development of these states.

1. Ziyadullayev N.S. National priorities and prospects of the Eurasian Economic Union in the context of integration and global instability. Natsional’nyye Interesy: prioritety i bezopasnost’ = National Interests: priorities and security. 2015; 15(300): 2-19. (In Russ.)

2. Lebedeva L.F., Migaleva T.Ye., Podbiralina G.V. Eurasian Economic Union: A new stage in economic interaction. Vestnik Rossiyskogo ekonomicheskogo Universiteta im. G.V. Plekhanova = Bulletin of the Russian Economic University. G.V. Plekhanov. 2015; 3 (81): 118-127. (In Russ.)

3. Gosudarstvennyy statisticheskiy komitet Azerbaydzhanskoy respubliki = The State Statistical Committee of the Republic of Azerbaijan. [Internet]. Available from: www.stat.gov.az.

4. Hall P. On Bootstrap Confidence Intervals in Nonparametric Regression. Annals of Statistics. 1992; 20(2): 695-711.

5. Tikhomirov N.P., Tikhomirova T.M., Ushmayev O.S. Metody ekonometriki i mnogomernogo statisticheskogo analiza = Methods of econometrics and multivariate statistical analysis. Moscow: Economics; 2011. 647 p. (In Russ.)

6. Verbik M. Putevoditel’ po sovremennyy ekonometrike. Per. s angl. V.A. Bannikov = Guide to modern econometrics. Per. from English V.A. Bannikov. Moscow: Nauchnaya kniga = Scientific book; 2008. 616 p. (In Russ.)

7. Yusubov F. Improving the trade and economic partnership of Belarus and Azerbaijan. Zhurnal mezhdunarodnogo prava i mezhdunarodnykh otnosheniya = Journal of International Law and International Relations. 2011; 4: 94-102. (In Russ.)

8. Andronova I.V. Evolution of integration processes in the post-Soviet space. Vestnik RUDN. Ceriya Ekonomika = Vestnik RUDN. Series Economics. 2012; 5: 72-81. (In Russ.)

9. Volovik N.P. Analysis of trade and economic relations of the Russian Federation with the countries of the Commonwealth of Independent States. Upravlencheskoye konsul’tirovaniye = Management Consulting. 2015; 5: 121-135. (In Russ.)

10. Pylin A.G. oreign economic relations of Azerbaijan in the context of regional integration [Internet]. Problemy postsovetskogo prostranstva = Problems of the post-Soviet space. 2015. Available from: https://www.postsovietarea.com/jour. (In Russ.)

11. Pelipas’ I., Shimanovich G., Kirkhner R. International relations and external shocks: the experience of using various specifications of the global VAR for Belarus. Analiticheskiye zapiski = Analytical notes [PS/02/2016]. Nemetskaya ekonomicheskaya gruppa = German economic group.. [Internet] Berlin / Minsk: Issledovatel’skiy tsentr IPM= IPM Research Center., 2016; 31 p. Available from: http://www.research.by/webroot/ delivery/files/ps2016r02.pdf

12. Apokin A.YU., Gnidchenko A.A., Sabel’nikova Ye.M. The potential of import substitution and the benefits of economic integration: disaggregated estimates. Ekonomicheskaya politika = Economic policy. 2017; 2: 44-71. (In Russ.)

13. Drobot Ye.V., Kostyleva S.O. Methods for assessing the consequences of economic integration for the countries of the Eurasian Economic Union. Rossiyskoye predprinimatel’stvo= Russian Journal of Entrepreneurship. 2017; 1: 23-38. (In Russ.)

14. Vardomskiy A.B., Pylin A.G., Shurubovich A.V On the issue of modernization of the economies of the CIS countries. Vestnik Instituta ekonomiki Rossiyskoy akademii nauk = Bulletin of the Institute of Economics of the Russian Academy of Sciences. 2017; 1: 22-40. (In Russ.)

15. Grigor’yev L., Pavlushina V., Bondarenko K., Brilliantova V. Dynamics of foreign trade. Byulleten’ o tekushchikh tendentsiyakh rossiyskoy ekonomiki. Analiticheskiy tsentr pri pravitel’stve Rossiyskiy Federatsii = Bulletin on current trends in the Russian economy. Analytical Center under the Government of the Russian Federation. 2018; 40; 19 p. (In Russ.)

16. Gurovab I.P., Platonova I.N., Maksakova M.A. The level of trade integration in the Eurasian Economic Union. Problemy prognozirovaniya = Problems of forecasting. 2018; 4: 140-157. (In Russ.)

17. Yakovlev A.A Some issues of enhancing the participation of domestic business in the EAEU states. Vestnik ekonomicheskoy bezopasnosti = Bulletin of Economic Security. 2018; 2: 380-384. (In Russ.)

18. Kuklina Ye.A. The energy vector of RussianAzerbaijani economic cooperation in the digital space of the modern world. YEVRAZIYSKAYA INTEGRATSIYA: ekonomika, pravo, politika = EURASIAN INTEGRATION: economics, law, politics. 2019; 4: 50-61. (In Russ.)

19. Orudzhev E.G., Huseynova S.M. The cointegration relations between Azerbaijan’s GDP and the balances of the trade relations of Russia and Belarus. Journal of Contemporary Applied Mathematics. 2019; 9; 2: 79-92. (In Russ.)

20. Matyushok V.M., Balashova S.A., Lazanyuk I.V. Osnovy ekonometricheskogo modelirovaniya s ispol’zovaniyem EVIEWS = Fundamentals of econometric modeling using EVIEWS. Moscow: RUDN; 2011. 206 p. (In Russ.)

21. Nosko V.P. Ekonometrika: Vvedeniye v regressionnyy analiz vremennykh ryadov = Econometrics: An Introduction to Time Series Regression Analysis. Moscow: MFTI, 2002. 273 s. (In Russ.)

22. Kontorovich G.G. Time Series Analysis. Ekonomicheskiy zhurnal Vysshey Shkoly Ekonomiki = Economic Journal of the Higher School of Economics. 2003; 1: 79-103. (In Russ.)