The Determinants of Intra-Industry Trade in Energy Sector among Iran and its Major Trading Partners

Yazdani, Mehdi; Pirpour, Hamed

doi:10.29252/jemr.8.30.43

Volume 8, Issue 30 (12-2017) jemr 2017, 8(30): 43-78 | Back to browse issues page

‎ 10.29252/jemr.8.30.43

‎ 20.1001.1.22286454.1396.8.30.5.6

Mendeley

Zotero

RefWorks

Yazdani M, Pirpour H. The Determinants of Intra-Industry Trade in Energy Sector among Iran and its Major Trading Partners. jemr 2017; 8 (30) :43-78
URL: http://jemr.khu.ac.ir/article-1-1583-en.html

The Determinants of Intra-Industry Trade in Energy Sector among Iran and its Major Trading Partners

Mehdi Yazdani ^*

¹, Hamed Pirpour²

1- Shahid Beheshti University , ma_yazdani@sbu.ac.ir
2- Shahid Beheshti University

Abstract: (7845 Views)

Due to the more dependence among countries and the raised demand for energy, the energy trade have increased during recent decades, while its major share is intra-industry trade (IIT). In this regard, countries are trying to exploit the diversity of a particular product, as well as the technology transfer and knowledge of technology which generated by IIT in this sector. According to the importance of role of IIT in the economies, this study will identify the determinants of IIT in the energy sector among Iran and its major trading partners using gravity model and Poisson pseudo-maximum-likelihood (PPML) method during 1997-2016. Based on the results, the effects of gross domestic product (GDP) per capita of Iran and the selected countries, the products’ diversification in the energy sector of Iran and its partners, access to the open sea for Iran's trading partners, and foreign direct investment (FDI) in the energy sector in Iran are significant and positive on IIT. However, the geographical distance, transportation costs, and trade imbalances among Iran and the selected countries have had the significant and negative effects on IIT

Keywords: Energy Sector, IIT, Gravity Model, Trade Costs, PPML

Full-Text [PDF 473 kb] (2036 Downloads)

Type of Study: Applicable | Subject: تجارت و مالیه بین الملل
Received: 2017/06/23 | Accepted: 2017/12/20 | Published: 2018/03/6

References

1.  Andersen, M. A. (2003). Empirical Intra-Industry Trade: What We Know and What We Need to Know. Vancouver: University of British Columbia.

2.  Anderson, J. E. (1979). A Theoretical Foundation for the Gravity Equation. American Economic Review, 69(1), 106-116.

3.  Anderson. J. & Van Wincoop, E. (2003). Gravity with Gravitas: A Solution to the Border Puzzle. American Economic Review, 93(1), 170-192. [DOI:10.1257/000282803321455214]

4.  Aquino, A. (1978). Intra-Industry Trade and Inter-Industry Specialization as Concurrent Sources of International Trade in Manufactures. Weltwirschaftliches Archiv, 114(2), 275-296. [DOI:10.1007/BF02696475]

5.  Attila, J. (2015). Country and Industry-Specific Determinants of Intra-Industry Trade in Agri-Food Products in the Visegrad Countries. Agricultural Economics, 117(2), 93-101. [DOI:10.7896/j.1514]

6.  Azarbayjani, K. & Taati, S. (2011). The Features of Vertical Intra-Industry Trade: Panel Data Approach. Economic Research and Policies, 19(57), 57-82.

7.  Balassa, B. & Bauwens, L. (1987). Intra-Industry Specialization in a Multi Country and Multi-Industry Framework. Economic Journal, 97(388), 923-939. [DOI:10.2307/2233080]

8.  Bergstrand, J. H. (1989). The Generalized Gravity Equation, Monopolistic Competition, and the Factor-Proportions Theory in International Trade. Review of Economic and Statics, 71(1), 143-153. [DOI:10.2307/1928061]

9.  Bikker, J. (2009). An Extended Gravity Model with Subsitution Applied to International Trade. DNB Working Paper, 215/2009.

10.  Bougheas, S., Demetriades, P. & Morgenroth, E. (1999). Infrastructure, Transport Costs and Trade. International Economics, 47(1), 169-189. [DOI:10.1016/S0022-1996(98)00008-7]

11.  Cleveland, C. J., Costanza, R., Hall, C. A. S. & Kaufann, R. K. (1984). Energy and the U.S. Economy: A Biophysical Perspective. Science, 225(4665), 890-897. [DOI:10.1126/science.225.4665.890]

12.  Combes, P. P. & Lafourcade, M. (2005). Transport Costs: Measures, Determinants, and Regional Policy Implications for France. Economic Geography, 5(3), 319-349. [DOI:10.1093/jnlecg/lbh062]

13.  Deardorff, A. (1998). Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?. Edited by Frankel, J. A. The Regionalization of the World Economy, 7-32. Massachusetts: National Bureau of Economic Research.

14.  Emami, K. & Shabani, N. (2009). Explanation of Intra-Industry Trade in Southwest Asian Countries in the Framework of Gravity Model of Trade. Economical Modeling, 3(9), 1-28.

15.  Gray, H. P. (1979). Intra-Industry Trade: The Effects of Different Levels of Data Aggregation. Tübingen: Herbert Giersch.

16.  Greenaway, D. & Milner, C. (1983). On the Measurement of Intra-Industry Trade. Economic Journal, 93(372), 900-908. [DOI:10.2307/2232755]

17.  Greenaway, D. & Milner, C. (1986). The Economics of Intra-Industry Trade. Oxford: Blackwell.

18.  Grubel, H.G. & Lloyd, P. J. (1975). Intra-Industry Trade: The Theory and Measurement of International Trade in Differentiated Products. Economic Journal, 85(339), 646-648. [DOI:10.2307/2230917]

19.  Head, K. & Mayer, T. (2002). Illusory Border Effects: Distance Mismeasurement Inflates Estimates of Home Bias in Trade. CEPII Working Paper, 2002-01.

20.  Head, K. & Ries, J. (2001). Increasing Returns versus National Product Differentiation as an Explanation for the Pattern of U.S.-Canada Trade. American Economic Review, 91(4), 858-876. [DOI:10.1257/aer.91.4.858]

21.  Helpman, E. (1984). A Simple Theory of International Trade with Multinational Corporations. Political Economy, 92(3), 451-471. [DOI:10.1086/261236]

22.  Hufbauer, G. C. (1970). The Impact of National Characteristics and Technology on the Commodity Composition of Trade in Manufactured Products. Edited by Vernon, R. The Technology Factor in International Trade, 145-231. New York: National Bureau of Economic Research.

23.  Im, K. S., Pesaran, M. H. & Shin, Y. (2003). Testingfor Unit Roots in Heterogeneous Panels. Econometrics, 115(1), 53-74. [DOI:10.1016/S0304-4076(03)00092-7]

24.  Jensen, J. L. W. V. (1906). Sur Les Fonctions Convexes et Les Inégalités Entre Les Valeurs Moyennes. Acta Mathematica, 30(21), 175-193. [DOI:10.1007/BF02418571]

25.  Kao, C. (1999). Spurious Regression and Residual-Based Tests for Co-integration in Panel Data. Econometrics, 90(1), 1-44. [DOI:10.1016/S0304-4076(98)00023-2]

26.  Linnemann, H. (1966). An Econometric Study of International Trade Flow. Amsterdam: Contributions to Economic Analysis.

27.  Loertscher, R. & Wolter, F. (1980). Determinants of Intra-Industry Trade: Among Countries and Across Industries. Weltwirtschaftliches Archive, 116 (2), 281-293. [DOI:10.1007/BF02696856]

28.  Manning, W.G. & Mulahy, J. (2001). Estimating Log Models: to Transform or Not to Transform?. Health Economics, 20(4), 461-494. [DOI:10.1016/S0167-6296(01)00086-8]

29.  Mayer, T. & Zignago, S. (2011). Notes on CEPII's Distances Measures: the GeoDist Database. CEPII Working Paper, 2011-25. [DOI:10.2139/ssrn.1994531]

30.  Novy, D. (2012). Gravity Redux: Measuring International Trade Costs with Panel Data. CEP Discussion Paper, 1114. [DOI:10.1111/j.1465-7295.2011.00439.x]

31.  Ohlin, B. (1933). Interregional and International Trade. Cambridge: Harvard University Press.

32.  Poyhonen, P. (1963). Toward a General Theory of International Trade. Ekonomiska Samfundets Tidskrift, 16(2), 69-78.

33.  Prehn, S., Brümmer, B. & Glauben, T. (2016). Gravity Model Estimation: Fixed Effects vs Random Intercept Poisson Pseudo-Maximum Likelihood. Applied Economics Letters, 23(11), 761-764. [DOI:10.1080/13504851.2015.1105916]

34.  Rasekhi, S. (2008). Intra-Industry Trade Measuring Methodology: A Case Study of Iran's Manufacturing Industry. Economic Research, 42(4), 221-244.

35.  Rasekhi, S. (2013). Effect of Total Factor Productivity on Intra Industry Trade of Iran's Manufacturing Industries. Applied Economics Studies, 2(7), 1-17.

36.  Rajabi, M. J. & Moghadasi, R. (2014). Computing Cost of Agricultural Bilateral Trade and Exploring the Effective Factors for Iran's Bilateral Trade with Developed and developing countries. Agricultural Economics & Development, 28(1), 92-108.

37.  Rajabi, M. J. & Moghadasi, R. (2015). Iran's Trade Costs and Its Effective Factors. Trade Studies, 19(74), 39-58.

38.  Ricardo, D. (1817). On the Principles of Political Economy and Taxation. London: John Murray.

39.  Sandberg, H. M., James, L., Seale, J. R. & Taylor, T.G. (2006). History, Regionalism, and CARICOM Trade: A Gravity Model Analysis. Development Studies, 42(5), 795-811. [DOI:10.1080/00220380600741995]

40.  Sen, S. (2010). International Trade Theory and Policy: A Review of the Literature. Levy Economics Institute of Bard College Working Paper, 635. [DOI:10.2139/ssrn.1713843]

41.  Sheng, Y., Wu, Y. Shi, X. & Zhang, D. (2015). Energy Trade Efficiency and Its Determinants: A Malmquist Index Approach. Energy Economics, 50, 306-314. [DOI:10.1016/j.eneco.2015.05.019]

42.  Silva, J. M. C. S. & Tenreyro, S. (2006). The Log of Gravity. Review of Economics and Statistics, 88(4), 641-658. [DOI:10.1162/rest.88.4.641]

43.  Soori, A. M. & Tashkini, A. (2014). Intra-Industry Trade between Iran and Regional Blocs. Economic Research, 14(1), 193-216.

44.  Sotomayor, M. (2012). Patterns and Determinants of Intra-Industry Trade for the Mexican Non-Maquiladora Manufacturing Industry. Business Inquiry, 11, 33-57.

45.  Starck, S. C. (2012). The Theoretical Foundation of Gravity Modeling. Master Thesis. Copenhagen Business School.

46.  Stone, J. A. & Lee, H. H. (1995). Determinants of Intra-Industry Trade: A Longitudinal, Cross-Country Analysis. Weltwirtschaftliches Archive, 131(1), 67-85. [DOI:10.1007/BF02709072]

47.  Tayebi, K., Yazdani, M., Zamani, Z. & Karimian, S. (2015). The Effect of Foreign Direct Investment on Iran-Turkey's Intra-Industry Trade. Economic Research (Tahghighat-e-Eghtesadi), 49(4), 961-983.

48.  Tinbergen, J. (1962). Shaping the World Economy: Suggestions for an International Economic Policy. New York: Twentieth Century Fund.

49.  Vona, S. (1991). On the Measurement of Intra-Industry Trade: Some Further Thoughts. Weltwirtschaftliches Archiv, 127(4), 678-700. [DOI:10.1007/BF02707415]

50.  Xing, Y. (2007). Foreign Direct Investment and China's Bilateral Intra-Industry Trade with Japan and the US. BOFIT Discussion Papers, 1/2007. [DOI:10.2139/ssrn.1002290]

52.  Yazdani, M., Sadeghi, M. & Ramezani, H. (2017). Border Effect on Bilateral Trade of Iran and Major Partners: Approach of Non-Linear Gravity Model. Journal of Economic Research (Tahghighat-e-Eghtesadi), 52(1), 245-269.

53.  Yazdani, M., Ramezani, H. & Sadeghi, M. (2016). Border Effects on Commodity Groups of Iranian Trade Flow: Application of Non-linear Specification. Journal of Economics Research, 16(62). 159-188.

54.  Zhang, J., Witteloostuijn, A. & Zhou, C. (2005). Chinese Bilateral Intra-Industry Trade: A Panel Data Study for 50 Countries in the 1992-2001. Review of World Economics, 141(3) 510-540. [DOI:10.1007/s10290-005-0041-9]