Iran's Intra-Industry Trade and Selected Trading Partners with an Environmental Approach

Document Type : Research Paper

Authors

1 PhD Student in International Economics, Faculty of Administrative Sciences and Economics, University of Isfahan

2 Professor of International Economics, Department of Economics, Faculty of Administrative Sciences and Economics, University of Isfahan

Abstract

Intra-industry trade (IIT) in final goods, which depends on transport costs, seasonal trade and even product diversification, is often subject to lower pressures from commercial, political and control levels due to competition in industry for higher quality and higher value added, which is a controlling factor for the environment.
The purpose of this article is to determine the type of cross-trade between Iran and selected trading partners and to identify its environmental impact. For this purpose, the different types of Iran’s IIT with its selected trading partners were calculated based on the Globel-Lloyd (GL), Fontan, Friedenberg and Peridy (FFP) and the Azhar and Eliot (AE) indexes over the period (2001-2015).
Emprical Results show that a significant share of intra-industry trade between Iran and selected countries (including neighbours, countries from East Asia and Europe) relies on vertical intra-industry trade, indicating that there is little competitive pressure on Iranian tradable goods. According to Azhar and Eliot's index, the major share of intra-industry trade is made from low quality goods. Hence, choosing such a trade strategy has not led to improvement of Iran's environmental quality. The implication of the empirical findings figures out the policy of IIT flows expansion in order to preserve the quality of the country’s environment.
JEL Classification: F14, F18

Keywords

References

آذربایجانی، کریم و ایزدی، گل آرا (1385). تجارت درون صنعت ایران با چین: نگاهی نو.  فصلنامه پژوهش­های اقتصادی، 26، 81 -99.
اسگویی، محمد مهدی برقی. (2008). آثار آزادسازی تجاری بر انتشار گازهای گلخانه‎‌‌ای (دی‌اکسید کربن) در منحنی زیست‎ محیطی کوزنتس، تحقیقات اقتصادی، 43(1).
طیبی، سید کمیل، شریفی، علیمراد و یونس‫پور، ساناز (2011). اثر تجارت درون صنعت بر کیفیّت محیط‏زیست: تجربه‌ی روابط تجاری ایران با کشورهای منتخب در سه حوزه مختلف.  فصلنامه تحقیقات توسعه اقتصادی، 1(2) ، 37-60.
موسوی، سیدنعمت اله، نیازی، ندا و فرج زاده، زکریا (2013). اثرات جهانی شدن بر انتشار آلودگی در ایران. فصلنامه علمی-پژوهشی تحقیقات اقتصاد کشاورزی، 5(18)، 75-90.

Abd-el-Rahman, K. (1991). “Firms’ Competitive and National Comparative Advantages as Joint Determinants of Trade Composition,” Review of World Economics (Weltwirtschaftliches Archiv), 127 (1), 83-97.
Azhar, A. K., & Elliott, R. J. (2006). On the measurement of product quality in intra-industry trade. Review of World Economics, 142 (3), 476-495.‏
Aralas, S. )2010(. “Essays in trade and environment: The environmental effects of intraindustry trade”, phd Dissertation, Depof Agricultural Economics, Michigan State University.
Benarroch, M., & Gaisford, J. (2014). "Intra‐industry trade liberalization and the environment". Review of International Economics, 22(5), 886-904.‏
Benarroch, M., & Weder, R. (2006). “Intra-industry Trade in Intermediate Products, Pollution and Internationally Increasing Returns,” Journal of Environmental Economics and Management, 52(3), 675-689.
Černoša, S. (2007). “Horizontal and Vertical Intra-Industry Trade between the Former CEFTA Countries and the European Union,” Managing Global Transitions, 5 (2), 157-178.
Dixit, A. K., & Stiglitz, J. E. (1977). “Monopolistic competition and optimum product diversity”. The American economic review, 67(3), 297-308.
Erdogan, A. M. (2014). Bilateral trade and the environment: A general equilibrium model based on new trade theory. International Review of Economics & Finance, 34, 52-71.‏
 Frankel, J. A., & Rose, A. K. (2005). Is trade good or bad for the environment? Sorting out the causality. Review of economics and statistics, 87 (1), 85-91.‏
Fontagné, L., Freudenberg, M., & Péridy, N. (1998). Intra-Industry Trade and the Single Market: Quality Matters, CEPR Discussion.
Fung, K.C., & Maechler, A.M. (2007). “The Impact of Intra-Industry Trade on the Environment”, J. Int. Trade & Economic Development. 16(1), 53-69.
Greenaway, D. Hine, D. R., & Milner, C. (1995). “Vertical and Horizontal Intra-Industry Trade: A Cross Industry Analysis for the United Kingdom,” The Economic Journal, 105, 1505-1518.
Grubel, Herbert G., & Lloyd, Peter J. (1975). Intra-industry Trade: the Theory and Measurement of International Trade in Differentiated Products. New York: Wiley. ISBN 0-470-33000-7.
Leitão, N. C., Dima, B., & Ștefana, D. C. (2011). The environment effects and intra-industry trade. World Applied Sciences Journal, 12(3), 243-249.‏
Levy, T., & Dinopoulos, E. (2016). Global environmental standards with heterogeneous polluters. International Review of Economics & Finance, 43, 482-498.‏
Managi, S., & Kumar, S. (2009). Trade-induced technological change: analyzing economic and environmental outcomes. Economic Modelling, 26(3), 721-732.‏
Roy, J. (2017). On the environmental consequences of intra-industry trade. Journal of Environmental Economics and Management, 83, 50-67.‏
Sharma, K. (2004). Horizontal and vertical intra-industry trade in Australian manufacturing: does trade liberalization have any impact?. Applied Economics, 36(15), 1723-1730.‏
Stone, J.A., & lee, H.H. (1995). Determonants of Intra-Industry trade : Aloginatodinal. Cross - corss - country Analysis. Weltwirtschaftliche Archive.131(1). 67-85.
Tharakan, P. M. (1984). Intra-industry trade between the industrial countries and the developing world. European Economic Review, 26(1-2), 213-227.‏
Veeramani, C. (2002). Intra-industry trade of India: Trends and country-specific factors. Weltwirtschaftliches Archiv, 138(3), 509-533.‏
https://oec.world/en/profile/country/irn/
https://ec.europa.eu/trade/policy/countries-andregions/countries/iran/
https://dfat.gov.au/geo/iran/Pages/iran-country-brief.aspx
www.irica.gov.ir/web_directory
www.amar.org.ir
Journal of Economic Research (Tahghighat- E- Eghtesadi)
Volume 55, Issue 2 - Serial Number 131
September 2020
Pages 483-509

Files

History

  • Receive Date: 29 September 2019
  • Revise Date: 16 March 2020
  • Accept Date: 13 May 2020

Share

How to cite

Statistics