Empirical Investigation of the Relationship Between the Tourism Sector and Economic Growth: Case of Azerbaijan

The deepening of globalization processes and the expansion of economic relations in the contemporary world have further increased the importance of the tourism sector. This sector is considered as a strategic field in terms of strengthening national economies, creating new economic opportunities and strengthening international solidarity. Tourism is not only a field of economic activity, but also the promotion of integration between civilizations. In recent decades, the tourism sector has been recognized as a strategic sector in the world economy and has increased its specific share in GDP. The increase in international tourist flows is not limited to the inflow of foreign currency, but also leads to positive changes in the foreign trade balance. Moreover, the indirect economic effects generated by tourism - for example, increased consumption of local products and services - contribute to the increase in overall economic well-being. An econometric analysis using a multiple regression model was conducted to assess the impact of the tourism sector on the economic development indicators of the Republic of Azerbaijan. The adequacy of the model was evaluated using the coefficient of determination. As a result, a strong approximation was observed between tourism revenue, employed population and GDP. To verify the model’s adequacy, Fisher’s F-statistic and the t-statistic were applied, and both tests confirmed that the parameters of the multiple regression model are statistically significant. Based on the results of the CUSUM test, the stability of the model’s parameters was confirmed. The equal variance of the residuals indicates homoskedasticity, which is one of the essential assumptions for the validity of the residuals. As a result of these processes, countries around the world have recognized the development of the tourism sector as a priority and have implemented various strategies to strengthen the role of this sector in the economy. In Azerbaijan, against the backdrop of these global trends, special attention has been paid to the development of tourism, and there has been a need to deeply investigate its economic impacts.