Optimizing the Export Diversification Strategy of Iran's Chemical Products Using Product Spaces and Economic Complexity Theories

Document Type : Research Paper

Authors

1 Department of Economics, Isfahan (Khorasgan) Branch, Islamic Azad University, Isfahan, Iran.

2 Department of Economics of Science, National Research Institute for Science Policy (NRISP), Tehran, Iran.

3 Department of Management, Sanandaj Branch, Islamic Azad University, Sanandaj, Iran.

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 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.

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Iranian Journal of Economic Studies
Volume 9, Issue 2 - Serial Number 18
December 2020
Pages 595-621

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History

  • Receive Date: 30 March 2021
  • Revise Date: 19 June 2021
  • Accept Date: 03 July 2021

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