Economic Research and Perspectives

Economic Research and Perspectives

Economic Integration and Synchronization of Business Cycles in Shanghai Group

Authors
Alireza Shakibai 1
Hassan Shahsanai 2
1 Associate Professor of Economics, Faculty of Economics and Management, Shahid Bahonar University of Kerman
2 M.A. in Economics, Shahid Bahonar University of Kerman
Abstract
Economic convergence can be considered as one of the practical reactions of the countries to globalization process. Thus, selecting a :union: or regional trade group is one of the important goals in economic planning. Studying international business cycles and their transfer from one country to another can have a great impact on regional cooperation. Investigating the relationship between trade and business cycles can also offer a proper analysis of regional integration. In this paper, such convergence is studied after Iran’s presence in Shanghai Group as an observer member and efforts which are made to join it. Econometric method and generalized gravity model for the years 1996-2009 are used to find out if there is any business convergence between Iran and member states of Shanghai Group and if synchronization of business cycles is effective to business convergence. It has been revealed that there is no business convergence between Iran and member states of Shanghai and the business relations are divergent as well. It is also found out that there is a negative and significant relationship between synchronization of business cycles and convergence (divergence) of these countries.
Keywords
Gravity Model
: Economic integration
Synchronization of business cycles
Shanghai Group
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Economic Research and Perspectives
Volume 12, Issue 3
Autumn 2012
Pages 89-105