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Dr Ali Raispour, Dr Mohsen Zayanderoodi, Mr Mohammad Reza Safavi Gerdini,
Volume 0, Issue 0 (12-2024)
Volume 0, Issue 0 (12-2024)
Abstract
Aim and Introduction
In most world economies, governments have been proposed as a complementary institution and are bound to interfere in the economy. The degree of government involvement in any economy depends on the political and economic system in that country. One of the government's intervention tools is subsidy payments considered as financial aids aiming at transferring government resources to buyers and sellers. Therefore, one of the most well-known ways of transferring income to vulnerable groups is subsidy payment. This tool has a long history in different economies. In general, subsidies can be divided into four categories: a) based on the government's goals, which include economic subsidies, development subsidies, social subsidies, political subsidies, and cultural subsidies; b) Based on the stages of the goods, which include consumption subsidies, production subsidies, distribution subsidies, service subsidies, export subsidies, and import reduction subsidies and currency savings; c) Based on the classification of the subsidy itself, which includes direct subsidy and indirect subsidy; and d) based on the reflection of its costs, which includes hidden subsidies and open subsidies. Also, regarding the methods of applying subsidies, it should be noted that subsidies in the consumption sector are mainly paid in cash, goods, general prices and coupons. On the other hand, the payment of subsidy will disrupt the price system and lead to deviation in production and investment.
Since governments dependent heavily on oil revenues usually seek to pay subsidies in general, they normally encounter many problems including waste of resources, increase in consumption, smuggling, lack of efficient allocation of resources and reduction of efficiency in the economy. This happens because the price of subsidized goods is not realistic. For this purpose, Iran and other developing economies are seeking to apply the policy of targeting subsidies. One of the results of policies targeting subsidies is the realization of prices, which will improve the performance of producers and choose an optimal production process.
Since targeting subsidies has significant effects on the relative advantage of manufactured goods and subsequent sustainable growth and development, therefore, it is crucially important and essential to investigate the effects of this policy on the business model.
A review of the experimental studies conducted inside the country indicates that the effect of reducing (eliminating) the subsidy of basic goods (Sections 25-22 in the software package of the Global Trade Analysis Project) on the trade pattern has not been investigated so far.
In this regard, the aim of the current research is to investigate the effects of reducing (eliminating) subsidies for basic goods (sections 22-25 in the software package of the Global Trade Analysis Project) on Iran's trade using the GTAP model.
Methodology
The Global Trade Analysis Project model is one of the types of Computable General Equilibrium (CGE) models, the software related to it (GEMPACK, RunGTAP) and the database are provided to the researchers by its designers.
In the current research, the data has been gathered in the form of four sectors (dairy, rice, sugar and other foods) and two regions (Iran and other parts of the world) and the analysis has been done in two scenarios which are designed as follows:
1) 50% reduction in the subsidy paid to the firm's consumption-domestic goods.
2) 100% reduction in the subsidy paid to the firm's consumption-domestic goods.
Findings
The results showed that in both scenarios, the economic welfare of Iran and the rest of the world decreased and increased, respectively, and the intensity of these changes is greater in the second scenario (removal of basic commodity subsidies). The share of resource allocation efficiency and term of trade and savings-investment relationship in reducing economic welfare is higher in the second scenario. The highest decrease in economic welfare in the first and second scenario is related to sector 25 and the lowest decrease in economic well-being in both scenarios is related to sector 22.
Reducing the subsidy paid on the firm's consumption-domestic goods in these sectors will increase the export of these goods. The most positive changes in Iran's trade balance in the first scenario (50% reduction in subsidies) are related to sector 25 and equal to 48.4 million dollars, and the most negative trade balance of Iran in the second scenario (complete elimination of subsidies) is related to sector 25 and equal to 7.96 has been negative. In total, the reduction of subsidies for basic goods simultaneously in all 4 sectors has led to positive changes in Iran's trade balance.
Discussion and Conclusion
According to the economic results of this research, it is recommended to gradually remove the subsidy paid to the firm's consumption domestic goods so that, while having a positive effect on the changes in Iran's trade balance, the economic welfare does not face a large and one-time decline
In most world economies, governments have been proposed as a complementary institution and are bound to interfere in the economy. The degree of government involvement in any economy depends on the political and economic system in that country. One of the government's intervention tools is subsidy payments considered as financial aids aiming at transferring government resources to buyers and sellers. Therefore, one of the most well-known ways of transferring income to vulnerable groups is subsidy payment. This tool has a long history in different economies. In general, subsidies can be divided into four categories: a) based on the government's goals, which include economic subsidies, development subsidies, social subsidies, political subsidies, and cultural subsidies; b) Based on the stages of the goods, which include consumption subsidies, production subsidies, distribution subsidies, service subsidies, export subsidies, and import reduction subsidies and currency savings; c) Based on the classification of the subsidy itself, which includes direct subsidy and indirect subsidy; and d) based on the reflection of its costs, which includes hidden subsidies and open subsidies. Also, regarding the methods of applying subsidies, it should be noted that subsidies in the consumption sector are mainly paid in cash, goods, general prices and coupons. On the other hand, the payment of subsidy will disrupt the price system and lead to deviation in production and investment.
Since governments dependent heavily on oil revenues usually seek to pay subsidies in general, they normally encounter many problems including waste of resources, increase in consumption, smuggling, lack of efficient allocation of resources and reduction of efficiency in the economy. This happens because the price of subsidized goods is not realistic. For this purpose, Iran and other developing economies are seeking to apply the policy of targeting subsidies. One of the results of policies targeting subsidies is the realization of prices, which will improve the performance of producers and choose an optimal production process.
Since targeting subsidies has significant effects on the relative advantage of manufactured goods and subsequent sustainable growth and development, therefore, it is crucially important and essential to investigate the effects of this policy on the business model.
A review of the experimental studies conducted inside the country indicates that the effect of reducing (eliminating) the subsidy of basic goods (Sections 25-22 in the software package of the Global Trade Analysis Project) on the trade pattern has not been investigated so far.
In this regard, the aim of the current research is to investigate the effects of reducing (eliminating) subsidies for basic goods (sections 22-25 in the software package of the Global Trade Analysis Project) on Iran's trade using the GTAP model.
Methodology
The Global Trade Analysis Project model is one of the types of Computable General Equilibrium (CGE) models, the software related to it (GEMPACK, RunGTAP) and the database are provided to the researchers by its designers.
In the current research, the data has been gathered in the form of four sectors (dairy, rice, sugar and other foods) and two regions (Iran and other parts of the world) and the analysis has been done in two scenarios which are designed as follows:
1) 50% reduction in the subsidy paid to the firm's consumption-domestic goods.
2) 100% reduction in the subsidy paid to the firm's consumption-domestic goods.
Findings
The results showed that in both scenarios, the economic welfare of Iran and the rest of the world decreased and increased, respectively, and the intensity of these changes is greater in the second scenario (removal of basic commodity subsidies). The share of resource allocation efficiency and term of trade and savings-investment relationship in reducing economic welfare is higher in the second scenario. The highest decrease in economic welfare in the first and second scenario is related to sector 25 and the lowest decrease in economic well-being in both scenarios is related to sector 22.
Reducing the subsidy paid on the firm's consumption-domestic goods in these sectors will increase the export of these goods. The most positive changes in Iran's trade balance in the first scenario (50% reduction in subsidies) are related to sector 25 and equal to 48.4 million dollars, and the most negative trade balance of Iran in the second scenario (complete elimination of subsidies) is related to sector 25 and equal to 7.96 has been negative. In total, the reduction of subsidies for basic goods simultaneously in all 4 sectors has led to positive changes in Iran's trade balance.
Discussion and Conclusion
According to the economic results of this research, it is recommended to gradually remove the subsidy paid to the firm's consumption domestic goods so that, while having a positive effect on the changes in Iran's trade balance, the economic welfare does not face a large and one-time decline
Dr. Ahmad Ezzati-Shourgoli, Dr. Hassan Khodavaisi,
Volume 21, Issue 1 (3-2021)
Volume 21, Issue 1 (3-2021)
Abstract
In the macroeconomics and international economics literature, the rate of change in domestic prices as a result of exchange rate changes is known as the degree of exchange rate pass-through. This is important because the shocks to the economy are transmitted from the exchange rate channel to the relative prices of the economy. In addition, the degree of exchange rate pass-through is affected by microeconomic and macroeconomic variables, so that the degree of exchange rate pass-through will change along with their changes. Therefore, in the present study, the impact of exchange rate on domestic prices is estimated by using the Time-varying Parameter Factor Augmented Structural VAR with Stochastic Volatility (TVP-SFAVAR-SV) and applying seasonal data from 1990 to 2018. First, the latent variable of the amount of speculative activities in the Iranian economy is modeled and estimated. The results show that the highest speculation belongs to the periods 1994 -1996, 1998-1999 and 2011- 2012. Also, the shock to the speculative activities variable in the period under study has led to an increase in inflation. The estimated exchange rate pass-through coefficient has not been constant. Historical variance decomposition analysis of exchange rate pass-through in the presence of the effective factors also shows that the almost all exchange rate fluctuations can be explained by inflation and exchange rate fluctuations, and production gaps.
Mr. Edris Karimi, Dr Zahra Fotourehchi, Dr Mohammad Hassanzadeh Mahmoudabad,
Volume 21, Issue 2 (6-2021)
Volume 21, Issue 2 (6-2021)
Abstract
This paper examines the time effect and severity of UN and US sanctions on the misery index in 41 countries under sanctions during 1991-2018 using new unbalanced composite data and the Generalized Least Squares (GLS) method. The estimation results of time effects of UN and US sanctions show that there is no time effect in relation to the effect of sanctions on the misery index, so that the passage of time has no increasing or decreasing effect of sanctions on the misery index. Moreover, the estimation results of the severity effects of UN and US sanctions on the misery index indicate that the imposition of the mild and moderate UN sanctions, while influencing positively the misery index, has no significant effect on the misery index; however, severe UN sanctions has significant positive effect on the misery index. In addition, the imposition of moderate sanctions by the United States has no significant effect on the misery index, but mild and severe US sanctions, have positive and significant effects on increasing the misery index by average coefficients of 3.20 and 12.14, respectively. Generally, the impact of UN multilateral sanctions on the misery index has been greater than of US unilateral sanctions.
Mrs. Sakineh Dehghanian, Dr Kazem Yavari, Dr Mehdi Hajamini,
Volume 21, Issue 3 (9-2021)
Volume 21, Issue 3 (9-2021)
Abstract
Dependency of Iranian Economy on oil revenues has provided conditions for imposing further sanctions on Iran. One way for Iran to get rid of sanctions is to sell its oil in currencies other than US dollar. In this regard, this article evaluates the risks for Iran if it, in selling oil, substitutes US dollar with currencies of its oil importing countries. We firstly apply Autoregressive Integrated Moving Average (ARIMA) and Self-Exciting Threshold Autoregressive (SETAR) models on Yuan and Rupee data for the period of 1990:01-2019:05 as well as on Euro data for the period of 1999:01-2019:05 and then based on the estimated models, forecast losses and gains for the period of 2019:06-2021:12 if Iran sells oil to China, India and Europe and receive payments respectively in Yuan, Rupee and Euro. Our forecasts indicate that selling oil to India and China and receiving oil revenue in Rupee and Yuan respectively will significantly decrease value of oil exports in range of 5-23 percent due to very likely devaluation of these currencies vs. the US dollar. Therefore, Iran must firstly use in its oil transaction relevant diplomacy with its oil importing countries, requesting them to share in risks of devaluation of their currencies vs. US dollar. Secondly, as a particular example, this article shows that political decisions may bring in economic consequences for the country. Therefore, Iranian authorities are expected to consider economic consequences of their political decisions more seriously and with sufficient transparency.
Dr Hassan Daliri,
Volume 21, Issue 4 (11-2021)
Volume 21, Issue 4 (11-2021)
Abstract
Establishing industrial free trade zones is one of the strategies of developing countries to take advantage of global trade, without the disadvantages of free trade expanding to the country. To take advantage of the free trade zones, Iran has so far established seven zones in different regions. But one of the important questions after the establishment of free trade zones is whether the established free industrial trade zones are able to improve economic growth and development. In this study, using the Synthetic Control Approach, the answer to the mentioned question is given for the Anzali Free Zone. In other words, the effect of establishing the Anzali free zone on the growth and development of Guilan province is estimated. The results of the study show that the Anzali Free Zone has not been able to have a positive and significant effect on the growth and development of Guilan province. Of the four variables under study, the establishment of the Anzali Free Zone has negative effect on the per capita industrial value-added in Guilan province compared to the control group. Also, it has not have significant effect on the amount of agricultural value-added, services value-added, the real GDP per capita in Guilan province compared to the control group.
Therefore, it can be concluded that the establishment of the Anzali Free Zone has not been able to achieve one of its main goals, which is the development and growth of the Guilan.
Mr. Kazem Biabany Khameneh, Dr Reza Najarzadeh, Dr Hassan Dargahi, Dr Lotfali Agheli,
Volume 22, Issue 1 (3-2022)
Volume 22, Issue 1 (3-2022)
Abstract
Along with the increased trade integration of countries and the expansion of international production fragmentation, Global Value Chains (GVCs) amount to a huge part of trade today, and participation in a network of trade partners at downstream and upstream of the value chains brings about considerable potentials such as the improvement of the flow of knowledge and more advanced production technologies and techniques, particularly for developing countries. It would not be unexpected for GVCs and participating in them from an environmental aspect to have potential benefits for countries as well.
In this regard, the present study discusses the role that GVCs play in countries' environmental performance. For this purpose, a sample of 65 developing and 36 developed countries was investigated using spatial panel data econometrics, conditional convergence, spatial auto-correlation, and GVCs participation spillover and direct impacts for countries in the form of south-south, north-south, and north-north bilateral added-value trade. The results indicated that there was spatial auto-correlation and conditional convergence based on GVCs for all countries although they are more intense in the case of north-north trade in developed countries. Besides, participation in GVCs has spillover impacts on the trading partner countries if developed countries are included in the bilateral value-added trade but this impact is not statistically acceptable in south-south trade of developing countries according to estimations. Thus, establishing trading relations with developed countries through GVCs is a potentially beneficial policy to improve developing countries’ environmental performance.
Dr Seyed Hadi Mousavinik, Dr Sholeh Bagheri Pormehr, Elham Kheirandish,
Volume 22, Issue 2 (6-2022)
Volume 22, Issue 2 (6-2022)
Abstract
The relationship between exchange rate changes and trade balance has always been one of the major issues in theoretical literature and policy circles. A new approach to theoretical literature and empirical work suggest that the interaction of these two variables depends on a number of issues, including how each country's export and import markets interact, and the degree to which exports of goods are dependent on imports. For this purpose, in the paper, the relationship between exchange rate and trade balance in the Iranian economy is examined by considering the crucial role of Intra –industry trade in the form of smooth transition regression model for the period 2001: 4 to 2018: 4. The results showed that the coefficient of effect of the exchange rate on the trade balance in each period is affected by the intra--industry index, so that the lower the index, the less the effect of the exchange rate increase on the trade balance, and as this index improves, the impact is greater. This means that the positive effects of money devaluation on the trade balance can be benefited when the competitiveness of domestic products with similar foreign goods in each sector increases.
Dr Mehdi Nejati, Mr. Yaser Balaghi Enalou,
Volume 22, Issue 2 (6-2022)
Volume 22, Issue 2 (6-2022)
Abstract
Iran's membership in Shanghai Cooperation Organization (SCO), in addition to political and security gains, can bring broad economic benefits. In this regard, in this research, the economic impacts of decreasing import tariffs of Iran and the Shanghai Cooperation Organization have been analyzed. In this study, empirical analysis and quantifying the results have been done regarding Global Trade Analysis Project (GTAP) model, as a computable general equilibrium CGE, and global and multi-regional model. Considering the international nature of analysis, a global model and database were required to achieve the purposes of this study, thus, version 10 of GTAP model and its database (published in 2020) was selected for analysis. In this research, the economic impacts (welfare, production, trade) of Iran's presence in the SCO in various economic sectors were analyzed in two scenarios (50% decrease and 100% decrease in bilateral tariffs). The results indicate that sector "Grains and Crops" in terms of high initial tariff rate, sector "Textiles and Clothing" in terms of high initial tariff rate, sector " Light Manufacturing" in terms of high initial tariff rate and sector " Heavy Manufacturing" due to high trade volume is the significant and influential sectors of Iran's membership in Shanghai Cooperation Organization. It is recommended that tariff rate changes of the mentioned sectors be performed with high accuracy. In general, the results indicate that the variables of welfare, production and trade are increasing in Iran.
Dr Vahid Nikpey Pesyan, Dr Samad Hekmati Farid, Dr Yousef Mohammadzadeh, Mrs. Fateme Nezaie,
Volume 22, Issue 3 (9-2022)
Volume 22, Issue 3 (9-2022)
Abstract
Foreign direct investment is one of the most important sources of capital for countries. Knowledge and technology enter the host country through foreign direct investment and lead to increased competition, optimal resource allocation, increased labor skills, increased productivity, and ultimately increased employment and economic growth of the host country. On the other hand, structural economic vulnerability through the creation of economic and political instability, macroeconomic imbalances, exchange rate instability and inflation, leads to a lack of foreign direct investment in the host country. Therefore, if a country has stable macroeconomic policies, foreign investors will be attracted to that country and will be willing to invest in it. The purpose of this study is to investigate the impact of structural economic vulnerability on the attraction of foreign direct investment in the Middle East and North Africa (MENA) countries during the period 2005-2018, using the Generalized Method of Moments (GMM). The results show that in accordance with the theoretical expectations of the research, the index of structural economic vulnerability has a negative and significant effect on attracting foreign direct investment. Iran experiences high structural economic vulnerability in recent years due to its dependence on oil revenues and numerous international sanctions. Among other research results, the variables of logarithm of GDP, political stability index and property rights index have positive and significant effects on the inflow of foreign direct investment.
Mrs. Shokooh Mahmoodi, Dr Seyed Abdulmajid Jalaee, Dr Zeinolabedin Sadeghi, Dr Alireza Shakibaei,
Volume 23, Issue 3 (8-2023)
Volume 23, Issue 3 (8-2023)
Abstract
Aim and Introduction
The growth of the digital currency market in the past years has attracted a lot of attention, and due to advantages such as transparency and new capabilities of the block chain, it is expected to continue its continuous growth in the future. The popularity of digital currencies such as Bitcoin and block chain-based currencies has created challenges and opportunities for the energy sector. Considering that electricity in most parts of the world are often produced using fossil fuels and non-renewable energies, the harmful environmental effects of digital currency mining are significant. Therefore, dealing with digital currency mining and considering related environmental costs can reveal the hidden costs of mining and provide a comprehensive and complete analysis in the field of digital currency. In this research, an attempt has been made to investigate and predict the trend of Bitcoin mining and related carbon dioxide emissions and environmental effects by using the method of system dynamics and design of the Bitcoin mining system from the time of the issuance of Bitcoin until 2034.
The results showed that Bitcoin mining will lead to the emergence and release of pollution in the world and its highest level during the peak of hash (300 billion GH) will be about 400 million kilograms of CO2 per day and until the next halving, Bitcoin mining will be profitable and after that the amount of extraction and consequently the level of its pollution will decrease.
Methodology
System dynamics is a method for modeling systems using accumulation, state and flow variables, which was introduced and developed in the 1960s by Forster (1961).
This method became very famous in the 1970s due to the publication of the book "Limits to Growth". This book used the system dynamics model to analyze the absurdity of the idea of unlimited growth, and today the most comprehensive source for the system dynamics model is the book "Business Dynamics" by Sterman (2000).
System dynamics can model the technical and social aspects of complex systems created by the adoption of Bitcoin and other cryptocurrencies. Therefore, due to its ability to explain emergent systemic phenomena in terms of interactions between agents related to human behavior and the (technical) framework of the system, it is a complete method to study the economic dynamics of this new form of money.
By using the system dynamics modeling technique (Forster, 1961; Sterman, 2000), the evolution of the network hash rate can be explained to a large extent. Assuming the existence of an efficient market, it can be analyzed that the miners will continue to mine Bitcoin to a certain extent that their expected profit from mining (which is netted from the cost of mining electricity) is realized. In other words, miners behave rationally, which is a basic concept for analyzing and predicting the future behavior of the hash rate of the network.
Results and Discussion
In this study, it was shown that the Bitcoin mining process can be modeled as a dynamic system using the dynamic systems method. Modeling begins with the hypothesis of efficient markets in Bitcoin mining. In the designed model it was shown how the Bitcoin mining system can be explained with a negative feedback loop that reduces the mining profit to zero with a time delay. By simulating this model for the next three halving periods, approximately in February 2024, digital currency mining will reach the point of maximum pollution production, and in other words, until the next halving, Bitcoin mining will be profitable, and after that, the amount of mining and, consequently, its pollution level will decrease. This model shows that the methods and tools of system dynamics can be effective for modeling Bitcoin and can be proposed for other existing or new cryptocurrencies as well as to explain the behavior of complex social systems created by the application of block chain technology.
Conclusion
The results showed that Bitcoin mining will lead to the emergence and release of pollution in the world, and its highest level will be around 400 million kilograms of CO2 per day during the peak of hash (300 billion Gigahash). Bitcoin mining, like any other profitable activity, when its profitability increases, it will be more welcome for exploitation and earning, therefore, according to its function and benefits, its pollution is predictable and unavoidable, but the main issue for decision makers and policy makers in this field is to compare the amount of hidden and obvious costs of digital currency mining with its benefits, and another point is to compare these costs to other similar activities.
The growth of the digital currency market in the past years has attracted a lot of attention, and due to advantages such as transparency and new capabilities of the block chain, it is expected to continue its continuous growth in the future. The popularity of digital currencies such as Bitcoin and block chain-based currencies has created challenges and opportunities for the energy sector. Considering that electricity in most parts of the world are often produced using fossil fuels and non-renewable energies, the harmful environmental effects of digital currency mining are significant. Therefore, dealing with digital currency mining and considering related environmental costs can reveal the hidden costs of mining and provide a comprehensive and complete analysis in the field of digital currency. In this research, an attempt has been made to investigate and predict the trend of Bitcoin mining and related carbon dioxide emissions and environmental effects by using the method of system dynamics and design of the Bitcoin mining system from the time of the issuance of Bitcoin until 2034.
The results showed that Bitcoin mining will lead to the emergence and release of pollution in the world and its highest level during the peak of hash (300 billion GH) will be about 400 million kilograms of CO2 per day and until the next halving, Bitcoin mining will be profitable and after that the amount of extraction and consequently the level of its pollution will decrease.
Methodology
System dynamics is a method for modeling systems using accumulation, state and flow variables, which was introduced and developed in the 1960s by Forster (1961).
This method became very famous in the 1970s due to the publication of the book "Limits to Growth". This book used the system dynamics model to analyze the absurdity of the idea of unlimited growth, and today the most comprehensive source for the system dynamics model is the book "Business Dynamics" by Sterman (2000).
System dynamics can model the technical and social aspects of complex systems created by the adoption of Bitcoin and other cryptocurrencies. Therefore, due to its ability to explain emergent systemic phenomena in terms of interactions between agents related to human behavior and the (technical) framework of the system, it is a complete method to study the economic dynamics of this new form of money.
By using the system dynamics modeling technique (Forster, 1961; Sterman, 2000), the evolution of the network hash rate can be explained to a large extent. Assuming the existence of an efficient market, it can be analyzed that the miners will continue to mine Bitcoin to a certain extent that their expected profit from mining (which is netted from the cost of mining electricity) is realized. In other words, miners behave rationally, which is a basic concept for analyzing and predicting the future behavior of the hash rate of the network.
Results and Discussion
In this study, it was shown that the Bitcoin mining process can be modeled as a dynamic system using the dynamic systems method. Modeling begins with the hypothesis of efficient markets in Bitcoin mining. In the designed model it was shown how the Bitcoin mining system can be explained with a negative feedback loop that reduces the mining profit to zero with a time delay. By simulating this model for the next three halving periods, approximately in February 2024, digital currency mining will reach the point of maximum pollution production, and in other words, until the next halving, Bitcoin mining will be profitable, and after that, the amount of mining and, consequently, its pollution level will decrease. This model shows that the methods and tools of system dynamics can be effective for modeling Bitcoin and can be proposed for other existing or new cryptocurrencies as well as to explain the behavior of complex social systems created by the application of block chain technology.
Conclusion
The results showed that Bitcoin mining will lead to the emergence and release of pollution in the world, and its highest level will be around 400 million kilograms of CO2 per day during the peak of hash (300 billion Gigahash). Bitcoin mining, like any other profitable activity, when its profitability increases, it will be more welcome for exploitation and earning, therefore, according to its function and benefits, its pollution is predictable and unavoidable, but the main issue for decision makers and policy makers in this field is to compare the amount of hidden and obvious costs of digital currency mining with its benefits, and another point is to compare these costs to other similar activities.
Mr. Jafar Mokhtari Shirehjini, Dr. Ebrahim Hadian, Dr. Ali Hussein Samadi, Dr. Ahmad Sadraei Javaheri,
Volume 23, Issue 4 (12-2023)
Volume 23, Issue 4 (12-2023)
Abstract
Introduction:
The interactions of economies have caused the sensitivity to choose import sources, target markets and trade partners in general. Each country chooses its own trade partners based on its coordinates in order to minimize its import costs and generate maximum export income while avoiding the negative effects of international economic fluctuations. Diversification of trade partners is one of the ways to strengthen of an economy and reduce the vulnerability against international economic fluctuations and shocks. Diversification of import sources and export destinations of each country can lead to the stability of foreign trade and increase the stability of domestic production. In Iran's economy, due to the special conditions, such as economic sanctions, this issue is of double importance. In the previous periods of sanctions (before 2017), one of the weak points of Iran's economy has been the decrease in diversity in the mix of foreign trading partners, which includes the decrease in the number of buyers of oil (as Iran's main export product), the decrease in the arrival of foreign tourists, and the reduction of countries exporting goods to Iran. In this situation, two countries, China and Russia, became Iran's main trade partners, and to some extent, it reduced the impact of Western economic sanctions against Iran's economy. Meanwhile, in the last two decades, China has practically become the main competitor and substitute for the economic powers of the world, known as the OECD member countries, and has acquired large markets in South and East Asia, the Middle East and Africa. Therefore, it can be said that diversification of trade partners for all countries of the world practically means creating opportunities and for Iran, it means a way to survive.
Methodology:
The present research is based on the "Locomotive theory", which expresses the influence and effectiveness of the economic fluctuations of countries on each other through foreign trade. For this purpose, two models with the same structure were designed for two periods during 1970- 2018 to investigate the role of China's presence or absence among Iran's trading partners using the structural vector auto-regression (SVAR) model. According to the "Locomotive theory", international economic fluctuations affect countries through foreign trade, and only a few countries have the potential to bring countries out of the crisis. This theory states that during 1975-77, the United States was the main "locomotive" to pull out the world economy (more precisely, the industrialized countries) from the previous recession (the first oil shock), and paid a very high price for it, and it was necessary for America's major partners in that period, especially Japan and Germany, to accept their role as the locomotive of the world economy and in this way help both the American economy and the world economy. This theory specifically states that industrialized countries are the sources of international economic fluctuations and their prosperity or recession first spreads to major partners and with a delay to other countries.
The monetary and financial policies of the United States have played a decisive role in the development of global economic cycles through trade and financial links with smaller countries. In recent decades, although the importance and role of the United States has remained, but the US economy is not growing fast enough to act as the sole locomotive of the world economy train, especially in the last decade. China alone, and other major emerging markets as a whole, have become important drivers of the global economy. China and other major emerging markets are increasingly interdependent. Because on the one hand, China is the main importer of raw materials, and on the other hand, it is a supplier of manufactured products and foreign investment. The occurrence of such a phenomenon in the field of international economy has attracted the attention of many researchers to discuss the role of business partners and examine the unilateral and mutual effects of such decisions.
According to a study conducted in 2015 by Assoumou Ella for Kenya, the trade relationship between a third world country and industrialized countries is drawn in the presence of an emerging economy. In this research, the same model is used for Iran's economy. For this purpose, in the present study, based on the theoretical and experimental literature of this field a structural vector auto-regression (SVAR) model has been designed and specified. The first reason for using this model is its design based on the theoretical structure, and second reason is to provide a framework in which a variable, while being endogenous, is affected by other endogenous variables; but it should not affect them. The second case is very important regarding Iran's economy; because the macroeconomic variables of Iran's economy for several reasons (weak structure of Iran's economy, the issue of sanctions, customs tariffs) have no significant effects on the macroeconomic variables of trading partners included in the model.
Results and Discussion:
The results of the analysis of the reaction functions show that in most cases, the fluctuations of the macroeconomic variables of Iran (including GDP, inflation, FDI, export and import) have decreased in response to the fluctuations of GDP and inflation of OECD countries after the inclusion of China in the model. So that the intensity of the impact of the shocks entered into the model has become milder and the time for disappearing of the shocks has also been shortened.
Conclusion:
The results show that the diversification of Iran's Trade partners during the mentioned period has reduced the effect of the economic fluctuations of OECD countries on the macroeconomic variables of Iran. This means more stability of Iran's economy, so diversification of trade partners leads to resiliency against international crises, especially in the context of sanctions.
The interactions of economies have caused the sensitivity to choose import sources, target markets and trade partners in general. Each country chooses its own trade partners based on its coordinates in order to minimize its import costs and generate maximum export income while avoiding the negative effects of international economic fluctuations. Diversification of trade partners is one of the ways to strengthen of an economy and reduce the vulnerability against international economic fluctuations and shocks. Diversification of import sources and export destinations of each country can lead to the stability of foreign trade and increase the stability of domestic production. In Iran's economy, due to the special conditions, such as economic sanctions, this issue is of double importance. In the previous periods of sanctions (before 2017), one of the weak points of Iran's economy has been the decrease in diversity in the mix of foreign trading partners, which includes the decrease in the number of buyers of oil (as Iran's main export product), the decrease in the arrival of foreign tourists, and the reduction of countries exporting goods to Iran. In this situation, two countries, China and Russia, became Iran's main trade partners, and to some extent, it reduced the impact of Western economic sanctions against Iran's economy. Meanwhile, in the last two decades, China has practically become the main competitor and substitute for the economic powers of the world, known as the OECD member countries, and has acquired large markets in South and East Asia, the Middle East and Africa. Therefore, it can be said that diversification of trade partners for all countries of the world practically means creating opportunities and for Iran, it means a way to survive.
Methodology:
The present research is based on the "Locomotive theory", which expresses the influence and effectiveness of the economic fluctuations of countries on each other through foreign trade. For this purpose, two models with the same structure were designed for two periods during 1970- 2018 to investigate the role of China's presence or absence among Iran's trading partners using the structural vector auto-regression (SVAR) model. According to the "Locomotive theory", international economic fluctuations affect countries through foreign trade, and only a few countries have the potential to bring countries out of the crisis. This theory states that during 1975-77, the United States was the main "locomotive" to pull out the world economy (more precisely, the industrialized countries) from the previous recession (the first oil shock), and paid a very high price for it, and it was necessary for America's major partners in that period, especially Japan and Germany, to accept their role as the locomotive of the world economy and in this way help both the American economy and the world economy. This theory specifically states that industrialized countries are the sources of international economic fluctuations and their prosperity or recession first spreads to major partners and with a delay to other countries.
The monetary and financial policies of the United States have played a decisive role in the development of global economic cycles through trade and financial links with smaller countries. In recent decades, although the importance and role of the United States has remained, but the US economy is not growing fast enough to act as the sole locomotive of the world economy train, especially in the last decade. China alone, and other major emerging markets as a whole, have become important drivers of the global economy. China and other major emerging markets are increasingly interdependent. Because on the one hand, China is the main importer of raw materials, and on the other hand, it is a supplier of manufactured products and foreign investment. The occurrence of such a phenomenon in the field of international economy has attracted the attention of many researchers to discuss the role of business partners and examine the unilateral and mutual effects of such decisions.
According to a study conducted in 2015 by Assoumou Ella for Kenya, the trade relationship between a third world country and industrialized countries is drawn in the presence of an emerging economy. In this research, the same model is used for Iran's economy. For this purpose, in the present study, based on the theoretical and experimental literature of this field a structural vector auto-regression (SVAR) model has been designed and specified. The first reason for using this model is its design based on the theoretical structure, and second reason is to provide a framework in which a variable, while being endogenous, is affected by other endogenous variables; but it should not affect them. The second case is very important regarding Iran's economy; because the macroeconomic variables of Iran's economy for several reasons (weak structure of Iran's economy, the issue of sanctions, customs tariffs) have no significant effects on the macroeconomic variables of trading partners included in the model.
Results and Discussion:
The results of the analysis of the reaction functions show that in most cases, the fluctuations of the macroeconomic variables of Iran (including GDP, inflation, FDI, export and import) have decreased in response to the fluctuations of GDP and inflation of OECD countries after the inclusion of China in the model. So that the intensity of the impact of the shocks entered into the model has become milder and the time for disappearing of the shocks has also been shortened.
Conclusion:
The results show that the diversification of Iran's Trade partners during the mentioned period has reduced the effect of the economic fluctuations of OECD countries on the macroeconomic variables of Iran. This means more stability of Iran's economy, so diversification of trade partners leads to resiliency against international crises, especially in the context of sanctions.
Majid Babaei Agh Esmaili, Dr Hassan Khodavaisi,
Volume 24, Issue 1 (3-2024)
Volume 24, Issue 1 (3-2024)
Abstract
Introduction
The existing literature on corruption is divided into two categories. The first category focuses on the determinants of corruption. Various empirical studies show that the main factors affecting the scope and extent of corruption are the quality of urban services, the level of wages in the public sector, the rule of law, especially anti-corruption laws and access to natural resources, the level of development and the degree of competitiveness of the economy, globalization and industrial policy of the country . The second category of existing literature focuses on the consequences of corruption. In other words, we can refer to studies such as the impact of corruption on the growth, quality of public infrastructure and public investment, foreign direct investment, income inequality and poverty, and government spending.
In line with the first category of the above-mentioned studies, the effect of globalization on corruption is the main focus of this article. In other words, in this research, we seek to answer the question, does the spread of globalization affect the level of corruption? Considering that globalization can have different effects on corruption, which depends on the level of globalization of countries, so it is likely that there is a non-linear relationship between them. For this purpose, statistical data of member countries of the Organization of the Islamic Cooperation (OIC) during the period 2003-2019, and the econometric method of panel smooth threshold regression have been used.
Methodology
For analyzing data, panel smooth transition regression (PSTR) model is used, which was presented and expanded by Gonzalez et al. (2005) and Colletaz & Hurlin (2006). We use the general model of the research, which is specified in the form of the following equation:
Where, COC: Corruption control index, KOF: Globalization index and The Control symbol indicates the control variables that are introduced below:
EF: economic freedom, GS: Government consumption expenditure as a percentage of GDP, a proxy for the size of the government, LGDP: the logarithm of real per capita income as an economic development index, INF: inflation rate, FL: the share of women among all employees (in percentage) used for the participation index of women or gender and PSI: Political stability index.
Results and Discussion
The results of the estimation suggest a strong nonlinear relationship between variables and represent a two-regime model with a threshold of 69.75 and a slope of 0.78. According to research findings, globalization has a negative and significant effect in the first regime and a positive and significant effect on the corruption control index in the second regime. Therefore, the U-shaped hypothesis between globalization and the corruption control index is confirmed in the studied countries. Also, with the transition variable (globalization index) passing the threshold limit and in the second regime, the positive effect of economic development on the corruption control index has decreased. The size of the government and the participation rate of women (gender) in both regimes have a negative and positive effect on the corruption control index, respectively. The negative relationship between economic freedom and corruption control index in the first regime has turned into a positive relationship in the second regime. The effect of political stability is positive and significant before the threshold limit, and finally, inflation in both regimes has no significant effect on the corruption control index.
Conclusion
Based on the results of this study, suggestions should be made to facilitate the identification and control of activities mixed with corruption:
1) Considering the direct effect of globalization in controlling corruption and its indirect effect through the removal of restrictions on trade and foreign investment (the channel of influence of the economic freedom variable), it is suggested that the countries under study have the necessary infrastructure to improve the globalization level through institutional and structural reforms, market liberalization, increasing competition and transaction transparency, and improving services in all economic sectors.
2) Legislators and statesmen of the studied countries should take the necessary measures for the fair distribution of income and reduce the class gap as a driving factor of corruption, in parallel with economic development.
3) Considering that with the size of the governments, the level of corruption has also increased, so comprehensive policies and programs should be implemented in order to make the government smaller, so more emphasis should be placed on privatization and reduction of government monopolies. In thix context, reducing the number of government employees, moving towards electronic government are among the actions that can lead to the shrinking of the public sector.
4) Increasing the relative share of women's employment reduces corruption. It is suggested to increase the share of women's participation in the government sector in these countries.
The existing literature on corruption is divided into two categories. The first category focuses on the determinants of corruption. Various empirical studies show that the main factors affecting the scope and extent of corruption are the quality of urban services, the level of wages in the public sector, the rule of law, especially anti-corruption laws and access to natural resources, the level of development and the degree of competitiveness of the economy, globalization and industrial policy of the country . The second category of existing literature focuses on the consequences of corruption. In other words, we can refer to studies such as the impact of corruption on the growth, quality of public infrastructure and public investment, foreign direct investment, income inequality and poverty, and government spending.
In line with the first category of the above-mentioned studies, the effect of globalization on corruption is the main focus of this article. In other words, in this research, we seek to answer the question, does the spread of globalization affect the level of corruption? Considering that globalization can have different effects on corruption, which depends on the level of globalization of countries, so it is likely that there is a non-linear relationship between them. For this purpose, statistical data of member countries of the Organization of the Islamic Cooperation (OIC) during the period 2003-2019, and the econometric method of panel smooth threshold regression have been used.
Methodology
For analyzing data, panel smooth transition regression (PSTR) model is used, which was presented and expanded by Gonzalez et al. (2005) and Colletaz & Hurlin (2006). We use the general model of the research, which is specified in the form of the following equation:
Where, COC: Corruption control index, KOF: Globalization index and The Control symbol indicates the control variables that are introduced below:
EF: economic freedom, GS: Government consumption expenditure as a percentage of GDP, a proxy for the size of the government, LGDP: the logarithm of real per capita income as an economic development index, INF: inflation rate, FL: the share of women among all employees (in percentage) used for the participation index of women or gender and PSI: Political stability index.
Results and Discussion
The results of the estimation suggest a strong nonlinear relationship between variables and represent a two-regime model with a threshold of 69.75 and a slope of 0.78. According to research findings, globalization has a negative and significant effect in the first regime and a positive and significant effect on the corruption control index in the second regime. Therefore, the U-shaped hypothesis between globalization and the corruption control index is confirmed in the studied countries. Also, with the transition variable (globalization index) passing the threshold limit and in the second regime, the positive effect of economic development on the corruption control index has decreased. The size of the government and the participation rate of women (gender) in both regimes have a negative and positive effect on the corruption control index, respectively. The negative relationship between economic freedom and corruption control index in the first regime has turned into a positive relationship in the second regime. The effect of political stability is positive and significant before the threshold limit, and finally, inflation in both regimes has no significant effect on the corruption control index.
Conclusion
Based on the results of this study, suggestions should be made to facilitate the identification and control of activities mixed with corruption:
1) Considering the direct effect of globalization in controlling corruption and its indirect effect through the removal of restrictions on trade and foreign investment (the channel of influence of the economic freedom variable), it is suggested that the countries under study have the necessary infrastructure to improve the globalization level through institutional and structural reforms, market liberalization, increasing competition and transaction transparency, and improving services in all economic sectors.
2) Legislators and statesmen of the studied countries should take the necessary measures for the fair distribution of income and reduce the class gap as a driving factor of corruption, in parallel with economic development.
3) Considering that with the size of the governments, the level of corruption has also increased, so comprehensive policies and programs should be implemented in order to make the government smaller, so more emphasis should be placed on privatization and reduction of government monopolies. In thix context, reducing the number of government employees, moving towards electronic government are among the actions that can lead to the shrinking of the public sector.
4) Increasing the relative share of women's employment reduces corruption. It is suggested to increase the share of women's participation in the government sector in these countries.
Mrs. Mahboubeh Abaszadeh, Dr Bahram Sahabi, Dr Hassan Heydari,
Volume 24, Issue 1 (3-2024)
Volume 24, Issue 1 (3-2024)
Abstract
The aim of this study is the comparative study of the intervention in foreign exchange markets in Iran, Türkiye and Mexico. Therefore, the goals, methods, and different tactics of the foreign exchange interventions of the central banks are discussed. In addition, in this study, to investigate and compare the behavior of the monetary authorities in the face of increasing exchange rate fluctuations, using the ordinary least squares method, the reaction function of the central bank has been estimated. The results of this research show that the foreign exchange interventions in Iran are different from those of Türkiye and Mexico in terms of the key features investigated. Also, according to the reaction function estimation results, in these countries the increase in the exchange rate leads to more sensitivity of the monetary authorities compared to its decrease.
Introduction
In this research, by examining the features of foreign exchange interventions, the differences and similarities of this foreign exchange policy are evaluated in Iran, Türkiye, and Mexico. Due to features such as the establishment of a floating currency system, the availability of daily intervention data, and the experience of currency crises, two emerging economies, Mexico and Türkiye, have been chosen to match the characteristics of foreign exchange interventions with interventions in Iran.
Methodology
First, we examine the general policies and laws of central banks in relation to foreign exchange policies in Türkiye and Iran. Then we have compared Iran, Mexico, and Türkiye's measures related to foreign exchange interventions. Laws, characteristics, reasons, and laws of foreign exchange interventions in Türkiye, Mexico and Iran are evaluated. The results of this research show how the laws, goals, and implementation methods of different foreign exchange interventions in Türkiye, Mexico, and Iran will reflect different reactions of the monetary authority. In this research, the ordinary least squares method is used to estimate the reaction function of the central banks of Iran, Mexico, and Türkiye. We consider the reaction function of the central bank as follows:
R t = c + α e t ~ + β ( e t ~ ) 2 + v t
In this equation,R t e t ~
Findings
The interventions of Mexico and Türkiye are different from the foreign exchange interventions in Iran in terms of the level of transparency, regularity, sterilization, and the tools used. In addition, some goals affecting the interventions were also different in the three countries. This result shows that among the monetary authorities of all three countries, there is a fear of an increase in the exchange rate, and the foreign exchange interventions of the countries are mainly aimed at reducing the exchange rate.
Discussion and Conclusion
The results show that the interventions of Mexico and Türkiye are different from the foreign exchange interventions in Iran in terms of the level of transparency, regularity, sterilization and the tools used. In addition, some goals affecting the interventions were also different in the three countries. Also, the results show that the monetary authorities of all three countries are more sensitive to an increase in the exchange rate than to a decrease in the exchange rate.
Introduction
In this research, by examining the features of foreign exchange interventions, the differences and similarities of this foreign exchange policy are evaluated in Iran, Türkiye, and Mexico. Due to features such as the establishment of a floating currency system, the availability of daily intervention data, and the experience of currency crises, two emerging economies, Mexico and Türkiye, have been chosen to match the characteristics of foreign exchange interventions with interventions in Iran.
Methodology
First, we examine the general policies and laws of central banks in relation to foreign exchange policies in Türkiye and Iran. Then we have compared Iran, Mexico, and Türkiye's measures related to foreign exchange interventions. Laws, characteristics, reasons, and laws of foreign exchange interventions in Türkiye, Mexico and Iran are evaluated. The results of this research show how the laws, goals, and implementation methods of different foreign exchange interventions in Türkiye, Mexico, and Iran will reflect different reactions of the monetary authority. In this research, the ordinary least squares method is used to estimate the reaction function of the central banks of Iran, Mexico, and Türkiye. We consider the reaction function of the central bank as follows:
In this equation,
Findings
The interventions of Mexico and Türkiye are different from the foreign exchange interventions in Iran in terms of the level of transparency, regularity, sterilization, and the tools used. In addition, some goals affecting the interventions were also different in the three countries. This result shows that among the monetary authorities of all three countries, there is a fear of an increase in the exchange rate, and the foreign exchange interventions of the countries are mainly aimed at reducing the exchange rate.
Discussion and Conclusion
The results show that the interventions of Mexico and Türkiye are different from the foreign exchange interventions in Iran in terms of the level of transparency, regularity, sterilization and the tools used. In addition, some goals affecting the interventions were also different in the three countries. Also, the results show that the monetary authorities of all three countries are more sensitive to an increase in the exchange rate than to a decrease in the exchange rate.
Dr Mostafa Heidari Haratemeh,
Volume 24, Issue 3 (9-2024)
Volume 24, Issue 3 (9-2024)
Abstract
Introduction
In international trade network, countries are classified into different societies. These societies are formed based on commercial relations. Countries that are in the same society have close trade relations, while countries that are in different societies have much weaker trade relations, which shows that classification phenomenon has a meaningful effect on the field of international trade of resources. These societies also significantly promote free trade and improve commercial security and create favorable business conditions. For countries that rely heavily on foreign resources, establishing trade zones or joining a trade zone for their long-term development is of paramount importance. The division of societies in the trade network is based on geographical location or gross domestic product, not regional trade agreements. Some researchers have investigated the evolutionary characteristics of societies and analyzed the sustainability of international trade. In addition, some researchers argue that societies increase their commercial power by stabilizing the flow of resources in international trade, and their international position improves through cooperation with other countries. Several studies have provided a lot of knowledge about the society and the structural features of the international trade network, but few studies have dealt with the formation of trade areas and what promotes the formation of a trade area. The formation of trade communities/regions can be a strategy to reduce restrictions and increase trade interactions and its security through close communication between countries. Therefore, the current study can become more necessary in the situation where the current international business cooperation has become more and more important. Therefore, two main questions arise that need to be answered: 1) How are business areas formed, and 2) What factors influence the formation of business areas? Based on the studies, resource dependence theory and complex network theory can explain these questions well. Resource dependence theory states that if a firm is highly dependent on the target market, then it will be constrained by the actors in that market. Complex network theory is also a useful tool for systematically analyzing interactions between countries, especially when there are many countries involved and strong links between them exists. The purpose in fact was to investigate and recognize the influence of the resource dependence theory and the complex network theory in the formation of international trade areas in line with the integration of global economy.
Methodology
The data were extracted from the 22 countries active in international trade and based on the availability of the data of the official COMTRADE database of the United Nations in the period of 2011-2021. They account for the entire international trade. In order to analyze the data and estimate the models, negative binomial regression was used because when there are countable and discrete data as the response variable, simple linear regression is not a suitable fitting method. So, Poisson regression was applied, which is considered a method in "generalized linear models" where the probability function for the "response variable" is considered to be "Poisson distribution" and suitable for count data.
Findings
The trade partner factor has a positive effect on the formation of international trade communities, that is, when a country cooperates with a large number of trade partners or has a superior position in the international trade network, it is more likely that other countries will form the same pattern. Therefore, when a country considers itself dependent on the resources of other countries, the possibility of forming a similar society will increase. Finally, network position plays a positive role in moderating the relationship between resource dependence and international trade areas.
Discussion and Conclusion
Based on resource dependence and complex network theory, and analyzing the decisive factors affecting the accession process of a country to the same trade zones, the dependence of the country's imports on the external environment is an integral factor in joining a country to the same trade zones. In fact, in choosing partners for the formation of commercial zones, countries attach great importance to the ability to provide resources of commercial partners. On the other hand, position of the network plays a positive role in the formation of a business community. Countries with a higher network position can not only access resources or reach the target market faster, but also have more control over the flow of resources. Therefore, it is more likely that countries will establish closer trade relations with countries that have a higher network position in order to increase their economic power. The more central a country's network position is, the easier it is to choose to join larger trade areas with other countries. Also, according to the resource dependence theory, the more central a country's network position is, the more likely it is to join the same trade areas as other countries. Network and resource considerations both simultaneously play a role in the strategic choice of national trade. In the case of countries that have the same resource abundance, a country can choose to form the same society as countries that have a more central network position. Finally, due to the development of export markets for domestic products, countries are easily affected by the network position. This will enable them to choose other countries that are in a more central network position to form the same society, rather than trying to trade among them. Based on the economic freedom factor and the diversity of the importing country, countries that can strengthen resource trade, can reduce or manage their dependence on other countries. In addition, they can balance the inventory and production of global resources.
In international trade network, countries are classified into different societies. These societies are formed based on commercial relations. Countries that are in the same society have close trade relations, while countries that are in different societies have much weaker trade relations, which shows that classification phenomenon has a meaningful effect on the field of international trade of resources. These societies also significantly promote free trade and improve commercial security and create favorable business conditions. For countries that rely heavily on foreign resources, establishing trade zones or joining a trade zone for their long-term development is of paramount importance. The division of societies in the trade network is based on geographical location or gross domestic product, not regional trade agreements. Some researchers have investigated the evolutionary characteristics of societies and analyzed the sustainability of international trade. In addition, some researchers argue that societies increase their commercial power by stabilizing the flow of resources in international trade, and their international position improves through cooperation with other countries. Several studies have provided a lot of knowledge about the society and the structural features of the international trade network, but few studies have dealt with the formation of trade areas and what promotes the formation of a trade area. The formation of trade communities/regions can be a strategy to reduce restrictions and increase trade interactions and its security through close communication between countries. Therefore, the current study can become more necessary in the situation where the current international business cooperation has become more and more important. Therefore, two main questions arise that need to be answered: 1) How are business areas formed, and 2) What factors influence the formation of business areas? Based on the studies, resource dependence theory and complex network theory can explain these questions well. Resource dependence theory states that if a firm is highly dependent on the target market, then it will be constrained by the actors in that market. Complex network theory is also a useful tool for systematically analyzing interactions between countries, especially when there are many countries involved and strong links between them exists. The purpose in fact was to investigate and recognize the influence of the resource dependence theory and the complex network theory in the formation of international trade areas in line with the integration of global economy.
Methodology
The data were extracted from the 22 countries active in international trade and based on the availability of the data of the official COMTRADE database of the United Nations in the period of 2011-2021. They account for the entire international trade. In order to analyze the data and estimate the models, negative binomial regression was used because when there are countable and discrete data as the response variable, simple linear regression is not a suitable fitting method. So, Poisson regression was applied, which is considered a method in "generalized linear models" where the probability function for the "response variable" is considered to be "Poisson distribution" and suitable for count data.
Findings
The trade partner factor has a positive effect on the formation of international trade communities, that is, when a country cooperates with a large number of trade partners or has a superior position in the international trade network, it is more likely that other countries will form the same pattern. Therefore, when a country considers itself dependent on the resources of other countries, the possibility of forming a similar society will increase. Finally, network position plays a positive role in moderating the relationship between resource dependence and international trade areas.
Discussion and Conclusion
Based on resource dependence and complex network theory, and analyzing the decisive factors affecting the accession process of a country to the same trade zones, the dependence of the country's imports on the external environment is an integral factor in joining a country to the same trade zones. In fact, in choosing partners for the formation of commercial zones, countries attach great importance to the ability to provide resources of commercial partners. On the other hand, position of the network plays a positive role in the formation of a business community. Countries with a higher network position can not only access resources or reach the target market faster, but also have more control over the flow of resources. Therefore, it is more likely that countries will establish closer trade relations with countries that have a higher network position in order to increase their economic power. The more central a country's network position is, the easier it is to choose to join larger trade areas with other countries. Also, according to the resource dependence theory, the more central a country's network position is, the more likely it is to join the same trade areas as other countries. Network and resource considerations both simultaneously play a role in the strategic choice of national trade. In the case of countries that have the same resource abundance, a country can choose to form the same society as countries that have a more central network position. Finally, due to the development of export markets for domestic products, countries are easily affected by the network position. This will enable them to choose other countries that are in a more central network position to form the same society, rather than trying to trade among them. Based on the economic freedom factor and the diversity of the importing country, countries that can strengthen resource trade, can reduce or manage their dependence on other countries. In addition, they can balance the inventory and production of global resources.
Dr Mohammad Nikzad, Dr Mahdi Yazdani,
Volume 24, Issue 3 (9-2024)
Volume 24, Issue 3 (9-2024)
Abstract
Introduction
Balance of payment (BOP) shocks are one of the most important factors causing instability in economies that rely heavily on raw material export. Due to its dependence on oil revenues, the Iranian economy has been affected by balance of payment impulses in different eras, which have led to the instability of the macro-economy, especially the fluctuation of exchange rate, and sometimes occurrence of currency crisis. In the literature of public finance, there are several types of taxes on financial transactions, each of which has been introduced according to a specific purpose. Nevertheless, these taxes have common characteristics that are considered as basis for their selection and implementation at some point of time, especially during the periods of financial crises. These include curbing fluctuations of financial markets, collecting fair taxes and the possibility of reducing tax evasion compared to other taxes as the most important features. Tobin's original idea was a double tax on currency transactions, which is due when the currency is bought and sold. The mentioned tax has a bias towards long-term investment and leads to moving away from short-term speculation and ultimately creating economic stability. In general, this tax can lead to its spending by increasing investment returns and increasing economic stability.
Methodology
One of the presented instruments in the literature of open macroeconomics in order to control excessive exchange rate fluctuations, especially when the economy is faced with exogenous negative impulses such as international sanctions, is to control capital outflow through the Tobin tax in the exchange rate market. In this study, by presenting a DSGE model for an open economy and compatible with the conditions of the Iranian economy, it was tried to evaluate the role of Tobin Tax in stabilizing macroeconomic variables. The focus was especially on evaluating the exchange rate in response to the shocks of the balance of payment in the framework of the managed floating exchange rate system. The presented model in this paper is simulated using the Dynare program that runs in MATLAB software. Daynar is able to find steady-state values for variables of the model and calculates impulse response paths of variables in case of economic shocks. At this stage, the pattern is written in the form of a Dynare file, which should have 5 sections that include the introduction of all variables (including endogenous and exogenous variables and parameters), the equations in the model, the initial values of the variables, and the available impulses. If all the steps above are done correctly, the Dynare program simulates the model and produces the impulse response functions for the variables of model against the included impulses and a summary of the moments of the simulated variables. Hence, in this study, it will be tried to evaluate the role of Tobin Tax in controlling the balance of payments innovations in the framework of the management floating exchange rate system.
Results and Discussion
The results of the analyzed variables show that with the negative shock of oil export, the output also decreases. Due to the decrease in the foreign exchange reserves, the real exchange rate has increased initially. With a decrease in the output and an increase in the real exchange rate, inflation increases at first. With a decrease in the amount of the output, also the consumption will decrease. Finally, with a decrease in the amount of the oil exports, the balance of payment has also been disturbed. The results of the impulse response functions of the oil export as a balance of payment shock showed that the application of Tobin Tax has reduced the variance of the exchange rate resulting from balance of payment shocks, which is in accordance with the economic literature. The obtained results have also shown that, Tobin tax has reduced the deviations of inflation and the output that the welfare loss function have decreased.
Conclusion
Therefore, according to the resuls, the policymaker can use the Tobin tax as a more transparent and efficient policy tool than quotas in the exchange rate market, which lead to provide more efficiency exchange rate market in mid and long-run.
Balance of payment (BOP) shocks are one of the most important factors causing instability in economies that rely heavily on raw material export. Due to its dependence on oil revenues, the Iranian economy has been affected by balance of payment impulses in different eras, which have led to the instability of the macro-economy, especially the fluctuation of exchange rate, and sometimes occurrence of currency crisis. In the literature of public finance, there are several types of taxes on financial transactions, each of which has been introduced according to a specific purpose. Nevertheless, these taxes have common characteristics that are considered as basis for their selection and implementation at some point of time, especially during the periods of financial crises. These include curbing fluctuations of financial markets, collecting fair taxes and the possibility of reducing tax evasion compared to other taxes as the most important features. Tobin's original idea was a double tax on currency transactions, which is due when the currency is bought and sold. The mentioned tax has a bias towards long-term investment and leads to moving away from short-term speculation and ultimately creating economic stability. In general, this tax can lead to its spending by increasing investment returns and increasing economic stability.
Methodology
One of the presented instruments in the literature of open macroeconomics in order to control excessive exchange rate fluctuations, especially when the economy is faced with exogenous negative impulses such as international sanctions, is to control capital outflow through the Tobin tax in the exchange rate market. In this study, by presenting a DSGE model for an open economy and compatible with the conditions of the Iranian economy, it was tried to evaluate the role of Tobin Tax in stabilizing macroeconomic variables. The focus was especially on evaluating the exchange rate in response to the shocks of the balance of payment in the framework of the managed floating exchange rate system. The presented model in this paper is simulated using the Dynare program that runs in MATLAB software. Daynar is able to find steady-state values for variables of the model and calculates impulse response paths of variables in case of economic shocks. At this stage, the pattern is written in the form of a Dynare file, which should have 5 sections that include the introduction of all variables (including endogenous and exogenous variables and parameters), the equations in the model, the initial values of the variables, and the available impulses. If all the steps above are done correctly, the Dynare program simulates the model and produces the impulse response functions for the variables of model against the included impulses and a summary of the moments of the simulated variables. Hence, in this study, it will be tried to evaluate the role of Tobin Tax in controlling the balance of payments innovations in the framework of the management floating exchange rate system.
Results and Discussion
The results of the analyzed variables show that with the negative shock of oil export, the output also decreases. Due to the decrease in the foreign exchange reserves, the real exchange rate has increased initially. With a decrease in the output and an increase in the real exchange rate, inflation increases at first. With a decrease in the amount of the output, also the consumption will decrease. Finally, with a decrease in the amount of the oil exports, the balance of payment has also been disturbed. The results of the impulse response functions of the oil export as a balance of payment shock showed that the application of Tobin Tax has reduced the variance of the exchange rate resulting from balance of payment shocks, which is in accordance with the economic literature. The obtained results have also shown that, Tobin tax has reduced the deviations of inflation and the output that the welfare loss function have decreased.
Conclusion
Therefore, according to the resuls, the policymaker can use the Tobin tax as a more transparent and efficient policy tool than quotas in the exchange rate market, which lead to provide more efficiency exchange rate market in mid and long-run.
Mr Mehrnoosh Patimar, Dr Zahra Zamani,
Volume 24, Issue 4 (12-2024)
Volume 24, Issue 4 (12-2024)
Abstract
Aim and Introduction
Trade is one of the most important factors for the economic progress of countries, which has become feasible with the globalization of business. In addition, the significant increase in energy consumption after the industrial revolution, aimed at improving the quality of human life, has led to increasing environmental degradation worldwide. Although economic growth is one of the main goals of countries, developed economies are more concerned about its environmental consequences. Unfortunately, it seems that developing countries often overlook environmental protection in their pursuit of desired economic growth.
Green technology is a form of technology that aims to minimize the environmental damage caused by energy consumption by increasing energy efficiency. Examples of this technology include renewable energy sources, energy efficiency measures, waste management, environmental monitoring systems, and electric vehicles, all of which contribute to significantly improving the quality of environment. Green technology and its positive consequences serve as a turning point for mitigating environmental damage and, most importantly, preventing further harm. It has proven to be highly effective and requires the collective efforts of all countries to achieve their economic goals while preserving and expanding their trade relationships, ultimately bringing their technological levels closer together.
Methodology
This research aims to investigate the technology gap and green technology and its effects on international trade between developed countries (Japan, South Korea, France, Germany, the United States, China) and developing countries (Iran, Turkey, Azerbaijan, Tajikistan, Pakistan, Kazakhstan, Kyrgyzstan, Uzbekistan). The study utilizes the gravity model and STATA software, analyzing the coefficients obtained from this model to examine how green technology development can have a positive impact on both environment and business. The data used in this analysis spans during 2008 - 2019 and is sourced from UNCTAD and WORLD BANK.
Findings
Based on the estimated results of this study, it has been determined that in developing countries, Gross Domestic Product (GDP) of the first country had a significant and positive impact on their trade. Therefore, a 1% increase in their GDP leads to an 0.84% increase in their trade. On the other hand, the impact of GDP for the second country is positive but not significant.
Furthermore, in developed countries, a positive and significant effect of Gross Domestic Product (GDP) on international trade is observed. A 1% increase in GDP for this group of countries leads to a 13.1% increase in trade for the first country and a 9.4% increase for the second country. Therefore, it can be concluded that an increase in production capacity creates greater capabilities for both groups of countries to enhance exports and trade.
The geographical distance has a significant negative impact on trade in both groups of selected countries. Therefore, a 1% increase in geographical distance leads to a 0.3% decrease in trade for developed countries and a 0.5% decrease in trade for developing countries. As a result, countries tend to prefer trading with their neighboring and geographically closer countries due to economic advantages, especially in transportation sector.
Technology gap has significant negative implications for developed countries and significant positive implications for developing countries. This means that with a one percent increase in technology gap between these countries, the trade of developing countries increases by 0.45 percent and the trade of developed countries decreases by 0.19 percent. Technology gap is considered a trade barrier in developed countries, while it is seen as an advantage in developing countries.
The impact of green technology is positive and significant in both selected groups of countries. One percent increase in green technology transformation results in a 0.91 percent and 1.91 percent increase in trade for developed and developing countries, respectively. This indicates that the adoption of green technology not only does not hinder international trade but can also strengthen trade relations in the green pathway.
Discussion and Conclusion
Transformation of green technology has had a significant and positive impact on trade for both groups of selected countries. This indicates that green technology has found a suitable position in advancing international trade for these countries.
Considering that green technology has a significant impact on development issues and the importance of preserving a clean and sustainable environment for future generations, as well as in line with the findings of this research, governments and societies should invest more in greener and more complex sectors. They should enhance their technical skills and develop the necessary technological infrastructure for the growth of green industries. Additionally, the international community should expand the support for emerging green industries in developing economies by strengthening global trade regulations, particularly through increased efforts by developing countries to acquire this technology.
According to the results obtained, the impact of technology gap on international trade among developing countries is positive and significant. This means that as the technology distance increases, bilateral trade between these countries also increases. Therefore, the mentioned countries, due to their lower level of technology, have a strong inclination to import technology and engage in trade with each other.
Based on the findings of this research, which identifies the technology gap as a stimulating and influential factor in increasing trade among these groups of countries, it is suggested to prioritize the advancement of technology for all countries. It is recommended to maintain a certain level of technology gap in developing countries while simultaneously pursuing alternative policies to harness its positive impact on trade
Trade is one of the most important factors for the economic progress of countries, which has become feasible with the globalization of business. In addition, the significant increase in energy consumption after the industrial revolution, aimed at improving the quality of human life, has led to increasing environmental degradation worldwide. Although economic growth is one of the main goals of countries, developed economies are more concerned about its environmental consequences. Unfortunately, it seems that developing countries often overlook environmental protection in their pursuit of desired economic growth.
Green technology is a form of technology that aims to minimize the environmental damage caused by energy consumption by increasing energy efficiency. Examples of this technology include renewable energy sources, energy efficiency measures, waste management, environmental monitoring systems, and electric vehicles, all of which contribute to significantly improving the quality of environment. Green technology and its positive consequences serve as a turning point for mitigating environmental damage and, most importantly, preventing further harm. It has proven to be highly effective and requires the collective efforts of all countries to achieve their economic goals while preserving and expanding their trade relationships, ultimately bringing their technological levels closer together.
Methodology
This research aims to investigate the technology gap and green technology and its effects on international trade between developed countries (Japan, South Korea, France, Germany, the United States, China) and developing countries (Iran, Turkey, Azerbaijan, Tajikistan, Pakistan, Kazakhstan, Kyrgyzstan, Uzbekistan). The study utilizes the gravity model and STATA software, analyzing the coefficients obtained from this model to examine how green technology development can have a positive impact on both environment and business. The data used in this analysis spans during 2008 - 2019 and is sourced from UNCTAD and WORLD BANK.
Findings
Based on the estimated results of this study, it has been determined that in developing countries, Gross Domestic Product (GDP) of the first country had a significant and positive impact on their trade. Therefore, a 1% increase in their GDP leads to an 0.84% increase in their trade. On the other hand, the impact of GDP for the second country is positive but not significant.
Furthermore, in developed countries, a positive and significant effect of Gross Domestic Product (GDP) on international trade is observed. A 1% increase in GDP for this group of countries leads to a 13.1% increase in trade for the first country and a 9.4% increase for the second country. Therefore, it can be concluded that an increase in production capacity creates greater capabilities for both groups of countries to enhance exports and trade.
The geographical distance has a significant negative impact on trade in both groups of selected countries. Therefore, a 1% increase in geographical distance leads to a 0.3% decrease in trade for developed countries and a 0.5% decrease in trade for developing countries. As a result, countries tend to prefer trading with their neighboring and geographically closer countries due to economic advantages, especially in transportation sector.
Technology gap has significant negative implications for developed countries and significant positive implications for developing countries. This means that with a one percent increase in technology gap between these countries, the trade of developing countries increases by 0.45 percent and the trade of developed countries decreases by 0.19 percent. Technology gap is considered a trade barrier in developed countries, while it is seen as an advantage in developing countries.
The impact of green technology is positive and significant in both selected groups of countries. One percent increase in green technology transformation results in a 0.91 percent and 1.91 percent increase in trade for developed and developing countries, respectively. This indicates that the adoption of green technology not only does not hinder international trade but can also strengthen trade relations in the green pathway.
Discussion and Conclusion
Transformation of green technology has had a significant and positive impact on trade for both groups of selected countries. This indicates that green technology has found a suitable position in advancing international trade for these countries.
Considering that green technology has a significant impact on development issues and the importance of preserving a clean and sustainable environment for future generations, as well as in line with the findings of this research, governments and societies should invest more in greener and more complex sectors. They should enhance their technical skills and develop the necessary technological infrastructure for the growth of green industries. Additionally, the international community should expand the support for emerging green industries in developing economies by strengthening global trade regulations, particularly through increased efforts by developing countries to acquire this technology.
According to the results obtained, the impact of technology gap on international trade among developing countries is positive and significant. This means that as the technology distance increases, bilateral trade between these countries also increases. Therefore, the mentioned countries, due to their lower level of technology, have a strong inclination to import technology and engage in trade with each other.
Based on the findings of this research, which identifies the technology gap as a stimulating and influential factor in increasing trade among these groups of countries, it is suggested to prioritize the advancement of technology for all countries. It is recommended to maintain a certain level of technology gap in developing countries while simultaneously pursuing alternative policies to harness its positive impact on trade
Mrs Kolsum Afshoon, Dr Mehdi Nejati, Dr Seyed Abdulmajid Jalaee, Dr Zeinolabedin Sadeghi,
Volume 25, Issue 1 (3-2025)
Volume 25, Issue 1 (3-2025)
Abstract
Aim and Introduction
Carbon tax is one of the most important policy tools in the field of energy, which is applied to the consumption, production or distribution of fossil energy, including oil products, coal, natural gas, etc. The purpose of carbon tax is to reduce economic and environmental effects caused by pollution by including environmental costs in the price of goods and services. This policy tool can bring positive economic and environmental consequences through changes in consumer and producer behavior. The purpose of this study is to investigate the effects of carbon tax on energy-intensive and non-energy-intensive industries in different regions of the world.
Methodology
Since a CGE model can describe the interactions between different factors in macroeconomic systems and examine the effects of a policy at the global level, therefore, a dynamic multi-regional CGE model has been used to better understand the policy effects.
Results and Discussion
The results show that the carbon tax in all scenarios leads to an increase in the price of goods with high energy intensity in all regions, and the price of goods with low energy intensity decreases, except in the group of developed and high-income countries. Production in the energy-intensive and non-energy-intensive sectors is facing an average decrease. Imports in the energy-intensive sector, except for the group of countries with higher-than-average income, will decrease for other groups, and in the non-energy-intensive sector as well.
Conclusion
To investigate the effect of carbon tax on the industries of different countries, first the countries of the world were grouped into 5 regions based on the criteria of the World Bank and then 5 policy scenarios based on the report of the International Energy Agency were implemented in each region. For modeling, a dynamic calculable general equilibrium model was used in order to achieve more accurate results, and then important industrial consequences were obtained by solving the model. From the results of this research and the studies that have been carried out so far, it can be seen that what is decisive in the consequences of the implementation of the carbon tax is the region and the country implementing the policy.
Based on this, the policy makers, considering the national and regional conditions and being aware of the possible effects of the policy, can include assumptions in the design and implementation of the policy in order to achieve efficient and appropriate conditions in the implementation of the carbon tax by reducing the negative effects. Based on the results of the research, it was observed that due to the differences in the regions, the macroeconomic effects in the industry will be different for different regions of the world. Therefore, one of the important points in the effort to bring the emission of greenhouse gases to zero is to pay attention to the differences in industries in different countries and the coordinated actions of the governments with each other for technical and financial support in order to accelerate the transformation of clean energy and reach the commitment goal. Since energy consumption is mainly related to production activities, especially production from energy-intensive industries, reducing greenhouse gas emissions from industry takes more time than some economic sectors. For this purpose, governments should present regular and specific programs to attract investments in the long term so that they can guide industries in the direction of deploying the most efficient technologies. The governments that implement carbon tax policies can also use the collected tax revenues to strengthen energy innovation. Therefore, industries that use unclean energy sources as production inputs, by upgrading production technologies, in addition to reducing production costs, can specialize in producing clean products
Carbon tax is one of the most important policy tools in the field of energy, which is applied to the consumption, production or distribution of fossil energy, including oil products, coal, natural gas, etc. The purpose of carbon tax is to reduce economic and environmental effects caused by pollution by including environmental costs in the price of goods and services. This policy tool can bring positive economic and environmental consequences through changes in consumer and producer behavior. The purpose of this study is to investigate the effects of carbon tax on energy-intensive and non-energy-intensive industries in different regions of the world.
Methodology
Since a CGE model can describe the interactions between different factors in macroeconomic systems and examine the effects of a policy at the global level, therefore, a dynamic multi-regional CGE model has been used to better understand the policy effects.
Results and Discussion
The results show that the carbon tax in all scenarios leads to an increase in the price of goods with high energy intensity in all regions, and the price of goods with low energy intensity decreases, except in the group of developed and high-income countries. Production in the energy-intensive and non-energy-intensive sectors is facing an average decrease. Imports in the energy-intensive sector, except for the group of countries with higher-than-average income, will decrease for other groups, and in the non-energy-intensive sector as well.
Conclusion
To investigate the effect of carbon tax on the industries of different countries, first the countries of the world were grouped into 5 regions based on the criteria of the World Bank and then 5 policy scenarios based on the report of the International Energy Agency were implemented in each region. For modeling, a dynamic calculable general equilibrium model was used in order to achieve more accurate results, and then important industrial consequences were obtained by solving the model. From the results of this research and the studies that have been carried out so far, it can be seen that what is decisive in the consequences of the implementation of the carbon tax is the region and the country implementing the policy.
Based on this, the policy makers, considering the national and regional conditions and being aware of the possible effects of the policy, can include assumptions in the design and implementation of the policy in order to achieve efficient and appropriate conditions in the implementation of the carbon tax by reducing the negative effects. Based on the results of the research, it was observed that due to the differences in the regions, the macroeconomic effects in the industry will be different for different regions of the world. Therefore, one of the important points in the effort to bring the emission of greenhouse gases to zero is to pay attention to the differences in industries in different countries and the coordinated actions of the governments with each other for technical and financial support in order to accelerate the transformation of clean energy and reach the commitment goal. Since energy consumption is mainly related to production activities, especially production from energy-intensive industries, reducing greenhouse gas emissions from industry takes more time than some economic sectors. For this purpose, governments should present regular and specific programs to attract investments in the long term so that they can guide industries in the direction of deploying the most efficient technologies. The governments that implement carbon tax policies can also use the collected tax revenues to strengthen energy innovation. Therefore, industries that use unclean energy sources as production inputs, by upgrading production technologies, in addition to reducing production costs, can specialize in producing clean products
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