Abstract
Problem statement: World economy has become increasingly integrated. There is an underlying assumption that integration into the world economy provides more opportunities for trade. The evidence shows that integration at the regional levels can help developing countries to prepare for the international economic integration. It will be important to outline and analyze past efforts at regional integration (regionalism) to have prospects for future arrangements. Approach: Therefore this study assessed the impact of Iran membership in Economic Cooperation Organization (ECO) on agricultural exports by means of generalized gravity model. The econometric method was used to isolate and eliminate the regional agreement effects is panel and pooled data techniques. Results: Our estimation results indicated positive and significant intra-trade impact of regionalism on Iranian agricultural export. Conclusion/recommendation: We had seen that, directly and indirectly, ECO could have positive effect on Iran agricultural trade. Indirectly, because similarity degree between Iran and the other ECO members in religion, border, ethnic, language and is very high in relation to the other chosen trade partners of Iran. Also a considerable share of the variability in ECO agricultural trade flows referred to uneconomic factors. Therefore, it seems that Iran would be able to expand its agricultural exports by gradually reducing trade barriers in ECO region and using of these ECO members' similarities.
Highlights
The world economy after World War II has become much more integrated
Agricultural export values from Iran to 28 chosen countries as a dependent variable is regressed on factor income for exporter and importer countries (GDPi, GDPj), population for exporter and importer countries (POPi, POPj) and distance between two countries (Dij)
To answer this question we have estimated both standard and generalized gravity model that shows the effective factors on Iran agricultural exports with a special concentration on economic cooperation organization
Summary
The first 20-30 years after World War II can be seen as a period characterized by shallow integration both globally and regionally ("old regionalism"). With the Uruguay round of GATT negotiations, there were strong elements of deep integration ("new regionalism")[7]. According to the World Trade Organization (WTO), there are over 250 Regional Trade Agreements (RTAs) currently in force. Most of these agreements have been concluded in the past 15 years and many new agreements are under negotiation[11]. Direction of trade data show that Asia, as the third hub of world trade after Europe and North America, has become increasingly integrated[4].Iran as an Asian developing country has regionalism and integration experiences such as ECO membership
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