Abstract
his paper identifies the comparative advantage and the rank of the manufacturing industries of IRAN using traditional and environmental variables. To do so, in the first stage, manufacturing industries are ranked according to employment, value added and profitability and then air pollution indices are added into the analysis. The development levels of manufacturing industrie s are calculated using numerical taxonomy method at 2-digit industry levels. The results showed that the comparative advantage of Iranian manufacturing industries, regardless of the indices of sustainable development and when these indices are to be taken into account are distinct from each other. In the first stage, the manufacture of other non-metallic mineral products, manufacture of basic metals, manufacture of chemicals and chemical products and manufacture of food products and beverages are ranked highest in 2005 respectively. But when air pollution indices were added into the analysis, the manufacture of other non-metallic mineral products has lost its advantage. Thus, with regard to indices of sustainable development, the comparative advantage is not a sufficient indicator for ranking of industries in terms of their performance.
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