Effects of Utilizing Unilateral Trade Preferences on Foreign Direct Investment Flows in Iran

Document Type : Research Paper

Authors

Department of Economics University of Isfahan, Isfahan, Iran

Abstract

There is a lack of study in Iran’s trade literature to investigate the role of unilateral trade preferences in the attraction of foreign direct investment (FDI) inflows. Indeed, this study aims to fill such research gap of the literature. This study examined the influence of non-reciprocal trade preferences (NRTPs) on foreign direct investment (FDI) flows in Iran, with a focus on the Quad nations' (QUAD ) Generalized System of Preferences (GSP) programs. The analysis used the time series data for the period 1985 to 2021 using the ARDL technique to examine the relationship between preferences of unilateral trade utilization and FDI inflows. the symmetric results show that GSP intensify FDI in both the long and short-run. Furthermore, this study revealed that if Iran seeks to export sophisticated items or products that are less reliant on natural resources, as well as greatly liberalize its trading policy, the adoption of GSP is projected to create bigger FDI flows to the nation. Other significant research findings of the symmetric impact indicate the existence of an inverse relationship between real effective exchange rate, the share of natural resources, and GDP on the level of foreign direct investment.

Keywords: International Trade, Preferences, Foreign Direct Investment (FDI), ARDL, Iran

Keywords

Main Subjects

Files

History

  • Receive Date: 01 January 2024
  • Revise Date: 23 June 2024
  • Accept Date: 27 June 2024

Share

How to cite

Statistics