International Economics
Zahra Aghili; Reza Akbarian; Ahmad Sadraei Javaheri; parviz Rostamzadeh
Abstract
In recent years, given the significance of the financial sector and its interdependence with other sectors, especially the international trade sector, this industry’s academics and planners have examined the impact of financial development on commerce and trade integration. Therefore, in the present ...
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In recent years, given the significance of the financial sector and its interdependence with other sectors, especially the international trade sector, this industry’s academics and planners have examined the impact of financial development on commerce and trade integration. Therefore, in the present study, using the data of 12 selected countries that are members of the Economic Cooperation Organization (ECO), Eurasia, and D8 during the period 1996-2020, and utilizing the augmented gravity model, the effect of a variety of financial tools, such as financial liberalization (FL) and open market operation (OMO), was discussed as a financial development to create trade integration between Iran and the selected countries. The results reveal that the index of financial liberalization has a positive and statistically significant impact on the degree of trade integration of the examined countries. In addition, the elasticity of trade integration is +0.01 than the OMO index. Another independent variable that has a positive effect on trade integration degree is economic size. Income convergence, population, the real exchange rate, and geographical distance have negative significant effects on trade integration in the countries under study. In order to establish the development plans of trade and financial sectors, the findings of this study may be of interest to policymakers and planners in ECO, Eurasia, and D8 nations, especially Iran; because the formation, growth, and strengthening of regional arrangements can offer a foundation for the entry of the region’s countries into the global economy and shield them from globalization’s challenges.
International Economics
Mahdi Hemmati; Ebrahim Hadian; Ali Hussein Samadi; Ahmad Sadraei Javaheri
Abstract
Exchange rate misalignment has involved many world countries. It has profoundly affected the internal and external sectors of the economy. Hence, disclosing the emergence and formation causes of the misalignments is a requisite. Studies on the Iranian economy have mostly evaluated the sanctions’ ...
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Exchange rate misalignment has involved many world countries. It has profoundly affected the internal and external sectors of the economy. Hence, disclosing the emergence and formation causes of the misalignments is a requisite. Studies on the Iranian economy have mostly evaluated the sanctions’ efficacy on macroeconomic variables, involving the economic growth, domestic production, liquidity, exports, imports, oil price, oil revenues, etc. Few studies have evaluated the sanctions’ impact on the foreign exchange market. There is no research work assessing the sanctions’ impact on exchange rate misalignment in Iran. The main purpose of this paper is to estimate the impact of economic sanctions on real effective exchange rate (REER) misalignment in the context of the Iranian economy during the period 1996:1 - 2019:4. In doing so, at first we apply the model designed by Edwards (1989) and Cottani et al. (1990) and using smooth transition regression (STR) to estimate the REER equilibrium and its misalignment. Moreover, factor analysis is used to estimate the sanction indices. Then to analyze the impact of economic sanctions on the REER misalignment a nonlinear autoregressive distributed lag (NARDL) model is employed.The time path of estimated REER misalignment indicates a lot of volatilities during the period of study. The estimated results also show that sanctions significantly affect these volatilities in the short run and long run and thereby increase REER disequilibrium in the Iranian economy.
International Economics
Faranak Miraali; Saied Isazadeh; Seyed Ehsan Hosseinidoust
Abstract
Foreign direct investment (FDI) is considered as an inseparable features of an open and influential global economic system and a key factor for growth and development between countries. Due to having huge amount of oil and gas resources as well as relatively large markets, Iran has a great potential ...
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Foreign direct investment (FDI) is considered as an inseparable features of an open and influential global economic system and a key factor for growth and development between countries. Due to having huge amount of oil and gas resources as well as relatively large markets, Iran has a great potential for attracting FDI far more than its performance. However, various sanctions imposed on the country in recent years has led to a decrease in FDI by creating a hostile psychological environment and high risk for economic activities. In this paper, we are going to examine the widespread impacts of economic sanctions imposed by the US on the FDI of Iran between 1980 and 2020 through a model called the synthetic control (SCM). Through SCM we estimate the difference in FDI between the treated country (Iran) and the counterfactual (Synthetic Iran). The results show that the sanctions leads to almost 12 billion $ reduction in the FDI compared to the no-sanctions situation. Following the escalation of sanctions under the Trump administration and the withdrawal of the US from the JCPOA, the adverse effects of declining FDI peaked at 20 billion $ in 2020.The placebo tests also show that the there are statistical significance in findings (at the 10%
International Economics
Golnaz Hadian; Sara Ghobadi; Majid Sameti
Abstract
In the last two decades, some economists have provided a model for obtaining the optimal tax rate to maximize economic growth. Aiming to contribute to these studies, this work presents a new approach for the determination of the optimal tax rate based on a stochastic metafrontier analysis. To this end, ...
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In the last two decades, some economists have provided a model for obtaining the optimal tax rate to maximize economic growth. Aiming to contribute to these studies, this work presents a new approach for the determination of the optimal tax rate based on a stochastic metafrontier analysis. To this end, the meta technical efficiency (MTE), group’s technical efficiency (TE), technology gap ratio (TGR), and optimal tax rate (OTR) were determined for the period 1996-2018 in a selection of member countries of the Organization of Islamic Cooperation (Group A), lower-middle-income (Group B) and upper-middle-income (Group C). It was found that Group A has the maximum average values of MTE, TE, and TGR, while most countries in Group B have the minimum average MTE. The results demonstrated that Russia enjoys the highest average values of MTE, TE, and TGR, and can be considered as the reference for the countries in Group C. Finally, it was concluded that with 90% statistical confidence, the average real tax rates in Iran and Kuwait are less than the balanced budget OTR during the studied period. The emphasis on increasing tax rates to maximize economic growth and the improvement in the efficiency of these governments seems necessary.
International Economics
Parisa Mohajeri; Ali Asghar Banouei
Abstract
Traditional trade theories and/or “Trade-in-Goods” predict that exports can generate 100% value-added which has recently been debated by Trade-in-Tasks theories. The root of these debates are referred to the existing conventional macro-economic accounting, which is expressed that expenditure ...
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Traditional trade theories and/or “Trade-in-Goods” predict that exports can generate 100% value-added which has recently been debated by Trade-in-Tasks theories. The root of these debates are referred to the existing conventional macro-economic accounting, which is expressed that expenditure components of final goods including gross exports (GE) equals to total value is consumed in each country. It means that a country’s GDP is the sum of its domestic final demand including GE. Generating 100% value added in domestic final demand may hold true but GE due to double counting may not generated 100% value added for the domestic economy. In addition to that domestic value added (DVA) has a nice property with Vertical Specialization (VS) in such a way that the sum of their shares are equal to one and therefore, can measure the degree of VS in trade. In this article, we take this issue as a starting point and for the first time try to analyze it with the following questions: What amount of DVA should be attributed to GE from Iran? What is the relationship between DVA and VS? We apply two methods of Hypothetical Extraction (HEM) and VS. Using the latest Input-Output Tables (IOTs) of 2011 and 2001 in Iran. The overall findings are as follows: One- the share of DVA in GE in 2001 is 95.02%, downs to 93.33% in 2011 and the shares of residual as an overestimation of GE are 4.98% and 6.67% for each year respectively. Second there is an inverse relationship between DVA and VS shares for both years. Third- the considerable large shares of DVA followed by small shares of VS suggest that Iranian economy is at the beginning of production chains with non-symmetric trade pattern.
International Economics
Mirreza Fazelian; Khadije Nasrollahi; Hadi Amiri
Abstract
Abstract:The purpose of this research is to criticize the Iranian governments’ policies supporting the Foreign Direct Investors. In this regard, 243 questionnaires have been distributed among actual investors (active in the country) and 107 questionnaires among potential ones; by collecting and ...
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Abstract:The purpose of this research is to criticize the Iranian governments’ policies supporting the Foreign Direct Investors. In this regard, 243 questionnaires have been distributed among actual investors (active in the country) and 107 questionnaires among potential ones; by collecting and applying Heckman two-step model, we analyzed them. Uusing Heckman two-step model was necessary because factors influencing potential investors’ behaviors to come or not to Iran were not necessarily the same as the factors influencing the amount of investment inflows by actual investors. Accordingly, in this article, the soft dimension of business environment (encompassing incertitude due to Political Instability, Xenophobia, ...) is differentiated from its hard dimension (encompassing Bureaucratic Environment, Government Executive Inability, ...) which can influance on the way that these dimensions impact on investor’s behavior. The results indicate that while in deciding to come to Iran, the investors only consider the soft dimension and its decisive importance, policy making in the field of Foreign Direct Investment (FDI ) are concentrated only on hard dimensions of the matter. For investors, deciding to enter Iran, the soft dimension is important to them, not the hard dimension, but after entering the country, hard dimensions also becomes important, so that if the country's status is suitable in terms of hard dimensions, actual investors will be more motivated to develop their business and bring more capital in to the country. Improperly prioritizes issues that the investors face, can be one of the failure factors of current policy making to attract real investors.
International Economics
Hassan Daliri
Abstract
This paper concentrates on the impact of foreign direct investment (FDI) on economic growth in different country income levels. This study is based on 79 countries into four income groups (31 High income, 18 Lower middle income, 21 Upper middle-income, and 9 Low-income countries) for the period 1990-2019. ...
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This paper concentrates on the impact of foreign direct investment (FDI) on economic growth in different country income levels. This study is based on 79 countries into four income groups (31 High income, 18 Lower middle income, 21 Upper middle-income, and 9 Low-income countries) for the period 1990-2019. Our estimations make use of panel quantile regression techniques. This article’s results show that the impact of FDI on economic growth appears to change with a country's growth level. The empirical results show that in countries with high income, medium-upper income levels, the influence of FDI on economic growth is always positive. Of course, there is a negative link between FDI and economic growth in the lower-income and the 30th percentile in medium-lower income. We obtained evidence that the growth effect of FDI is conditional upon the level of income and growth in host countries. The impact of FDI on economic growth depends on the countries income level. FDI is particularly suitable for economic growth in countries with higher GDP growth. In countries with medium-upper income levels of income, the influence of FDI on economic growth is greater than other income groups.
International Economics
Zahra Mahdavi Sabet; Mohammad Ali Abdolvand; Kambiz Heidarzadeh; Mohsen Khounsiavash
Abstract
Organizations enter into the international competitive markets because of different motivates such as: gaining international reputation, achieving long-term growth, increasing profitability, taking advantages of economies of scale, domestic market maturity, the intensity of competition in domestic market, ...
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Organizations enter into the international competitive markets because of different motivates such as: gaining international reputation, achieving long-term growth, increasing profitability, taking advantages of economies of scale, domestic market maturity, the intensity of competition in domestic market, governmental rules and regulations; but actually all of the companies concerns of organizations is to improve export performance. Given the sanctions on the oil industry in Iran and the lack of a comprehensive model of export performance of Iranian petroleum products, this research can help improve and develop this industry in global markets. The statistical society of this mixed research method includes Iranian Petroleum Exporters Association. According to the first qualitative research, non-probability and snowball sampling method was used in this research; for gathering information, 7 semi-structured depth interview was used. Regarding the quantitative research in the second study, probable and random sampling method was used in this research. A Likert Spectrum Questionnaire of 5-point scale was used to gather information. In the first study, after open, pivotal and selective coding and using Atlas qualitative software, recommended antecedents of Iranian oil products export performance includes: market orientation, marketing mix, company resources, and macro environmentand export performance itemsof Iranian oil products includes: financial performance, customer retention and customer satisfaction. In the second study, 19 variables with several cases and continuity domains were proposed. 57 items were used to measure structures and all 16 hypotheses were supported.
International Economics
Anvar Khosravi; Saeed Daei-Karimzadeh; Behrooz Shahmoradi; Heirsh Soltanpanah
Abstract
Achieving sustainable development in the future requires investing in productive capabilities that lead to export diversification. Given the importance of the chemical industry as a strategic industry around the world, especially in Iran, and its effect on upstream and downstream industries, determining ...
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Achieving sustainable development in the future requires investing in productive capabilities that lead to export diversification. Given the importance of the chemical industry as a strategic industry around the world, especially in Iran, and its effect on upstream and downstream industries, determining the optimal export diversification strategy in this sector is critical. In this regard, the theory of economic complexity will be used as a basis for identifying high-potential opportunities for export diversity and the theory of product space will be applied which is a powerful tool for identifying strategies. Using export data of chemical products (2014-2018) in 128 countries, we drew product space for Iran. Based on revealed comparative advantages of more than one, results for Iran show that out of 921 six-digit chemical products of the harmonized system, 295 product codes has potential to be activated. Subsequently, by adding two new constraints to the model, potentially activate products were reduced to 145 products. Next, by implementing five strategies: random, greedy, high degree, low degree and majority on Iran's chemical products network, an integration of greedy and majority strategies has been shown to minimize network activation time. Finally, by merging these two strategies, the optimal strategy was identified, and 145 products were prioritized in order to improve export diversity.
