Document Type : Research Paper
Authors
1 Assistant professor, Department of Economic, Payame Noor University, Tehran, Iran
2 Associate Professor of Economics, Allameh Tabataba’i University, Tehran, Iran
3 Assistant professor of economic, Faculty of management and economic, Payame Noor University, Tehran, Iran
Abstract
Export plays a vital role in developing countries, and diversification in industrial exports can foster sustainable growth by enhancing productivity, attracting investment, stabilizing foreign exchange earnings, and reducing reliance on natural resources. A key approach to promoting and diversifying exports, especially in developing economies, is through the import of intermediate and capital goods. Accordingly, this study examines the impact of intermediate and capital goods imports, along with other relevant factors, on the diversification of Iran's manufacturing exports using 2-digit ISIC (Rev. 4) data and a panel data model spanning the period from 2006 to 2021. Empirical findings reveal that both intermediate and capital goods imports have a positive and significant impact on export diversification. Specifically, a 1 percent increase in capital goods imports raises export diversification by 0.01 percentage points, while a 1 percent increase in intermediate goods imports increases it by 0.036 percentage points. Further analysis indicates that the effects vary across industrial sub-sectors: the manufacturing of food products and beverages shows the highest impact, whereas industries producing tobacco products, medicines, and chemical and herbal pharmaceuticals exhibit no significant effect. Therefore, trade and industrial policies should prioritize facilitating the targeted import of intermediate and capital goods in sectors where these inputs significantly enhance export diversification. Such policies can promote technology transfer, improve productivity, and support sustained export diversification. Additionally, policy interventions and incentives should be sector-specific and aligned with the structural characteristics of each industry to ensure efficient resource allocation and avoid potential distortions.
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