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Determinant factors of vertical intra industry trade in agricultural sector: A study of Iran and her main trading partners

Author

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  • Saeed Rasekhi

    (Faculty of Economics and Administrative Sciences, University of Mazandaran, Babolsar, Iran)

  • Shideh Sadat Shojaee

    (Faculty of Economics and Administrative Sciences, University of Mazandaran, Babolsar, Iran)

Abstract

The present study has investigated the country specific determinants of the vertical and total intra-industry trade between Iran and its main trading partners (including 24 countries) in the agricultural products group during the time period 2001-2007. For this purpose, first we have measured the types of the intra-industry trade. Then we have examined the determinants of the vertical and total intra-industry trade in the agricultural sector by using the panel technique. Based on the obtained results, it has confirmed that economic development (both per capita income and HDI) has a positive and significance effect on the Iran's bilateral intra-industry trade. Also, the results verify the Linder hypothesis. In sum, the Iran's foreign trade in agricultural sector is mainly based on comparative advantage. Specifically, there is a negative and significant relationship between the revealed comparative advantage and the industry trade. In addition, the endowment of land affects positively the high vertical intra-industry trade. Also according to the results, the size market differences impact the intra-industry trade negatively.

Suggested Citation

  • Saeed Rasekhi & Shideh Sadat Shojaee, 2012. "Determinant factors of vertical intra industry trade in agricultural sector: A study of Iran and her main trading partners," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 58(4), pages 180-190.
    • Handle: RePEc:caa:jnlage:v:58:y:2012:i:4:id:13-2011-agricecon
    DOI: 10.17221/13/2011-AGRICECON
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