ASSESSING THE DEMOGRAPHIC FACTOR IN AZERBAIJAN’S ECONOMIC GROWTH

Abstract

Between 2000 and 2015, Azerbaijan experienced one of the fastest periods of economic growth in the world, after which growth slowed sharply. This article examines the extent to which a changing demographic structure, particularly shifts in the share of theworking-age population, can distort a key economic indicator such as gross domestic product (GDP) per capita. Based on World Bank data for 2000–2024, growth is decomposed into four components: population growth, changes in the share of the working-age population, employment dynamics, and labor productivity. The analysis shows that during 2000–2015, the increase in the share of the working-age population amounted to 0.66 percent annually and strengthened the demographic dividend, making per capita growth appear stronger than it actually was. After 2015, however, this dividend reversed, as the share of the working-age population began to decline by 0.18 percent annually, weakening GDP per capita growth. The counterfactual analysis shows that if the pre-2015 demographic trend had continued through 2024, annual GDP per capita growth would have been approximately 0.83 percentage points higher. This would imply an additional 8.3 percentage points of per capita income growth by 2024. The findings suggest that GDP per working-age person is a more informative indicator for evaluating Azerbaijan’s economic performance, interpreting growth dynamics more accurately, and showing the macroeconomic effects of demographic change more clearly.