The impact of foreign trade on productivity of Iranian industrial sector

This research aimed at analyzing the effect of foreign trade on the productivity of industry in Iran. Panel data were collected for the period ۲۰۰۸-۲۰۱۵. The variables were composed of production value, added value, employment, investment, exports, and imports. In addition, productivity indexes were developed for each industrial subgroup to help calculate and observe the growth of productivity. The model was estimated by a panel model with fixed effects and the GLS method. Eventually, the OLS method was used to examine the effect of exports/production and imports/production ratios on the productivity of the industries. The results showed that the variable of exports/production ratio )x) had a positive sign and was equal to ۰.۰۳. This means that a ۱% increase in this ratio improves productivity by ۰.۰۳%. On the other hand, the variable of imports/production ratio had a negative sign and was equal to ۰.۰۱, implying that a ۱% increase in this ratio reduces productivity by ۰.۰۱%. The results confirm the existence of a positive relationship between foreign trade and productivity of Iranian industrial sector.

Keywords:

foreign trade , productivity , Iranian industrial sector