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Developing a commodity trading strategy for Iran By applying a Gravity Model among D-8 Countries

Author Affiliations

  • 1Dept. of management and accounting, Shahid Beheshti University, Tehran, IRAN
  • 2 Dept. of Management, Semnan University Tehran, IRAN

Res. J. Recent Sci., Volume 3, Issue (12), Pages 16-24, December,2 (2014)

Abstract

Globalization is an inevitable process with two approaches including: the globalization of the economy and the expansion of global trade. There are two paradoxical consequences of the creation of trade (social welfare) and the deviation of trade (decreased welfare) which elicits the countriesí reactions. This dialectic move is represented in the countriesí attitudes toward blocs, associations, and economic and commercial arrangements among countries. The literature indicates the inapplicability of the human-based indexes in the estimated model of the commercial potential of the countries in forming economic and commercial associations. Accordingly, the present study aims at developing a strategic framework of Iranís commodity trading with the D-8 countries based on the GM theory. The generalized GM theory turns into an expanded GM theory using variables expressing human attitudes. The findings indicated that as the classical variables of GDP and openness economy, and per capita production increase, Iranís trading potential increases. Distance and population increase, however, decrease this potential. Human variables including the human development index, the share of research in GDP, the share of public trainings, and the ratio of labor force in the industry to the total labor force show that as these variable grow, Iranís goods trade potential will increase. In fact, the innovative part of the process of developing the Iranian goods trade model involves proving the effect of the human-based variables in the Gravity model. The study demonstrated that the Linder variable and direct foreign investments do not influence commercial trades among the D-8 countries.

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