The Nexus Between International Trade and Sustainable Economic Growthin Iran: An ARDL Modeling Approach

This article analyzes the nexus between international trade and Sustainable Economic Growth (SEG)in Iran, as an oil-dependent developing country, by estimating both the Long and short-runrelationships, the Vector Error Correction Model (VECM), the speed of adjustment to equilibrium inresponse to shocks, and the causality relationship among economic growth and international trade. Thepaper also provides some analytical insights into Iran`s international trade trend. According to theresults, it seems that export expansion would contribute to GDP growth through positive economicexternalities. Simultaneously, GDP could have a prominent role in the import expansion, leading tofurther international trade through enabling domestic industries and facilitating technologicaladvancements and boosting industries which in turn promote SEG. This mechanism would provide asolid ground to recommend policymakers to encourage and facilitate Iranian industries to transfertowards export-led manufacturing and promote an international entrepreneurship environment.

Keywords:

International Trade , Sustainable Economic Growth , Vector Error Correction Model , Granger Causality.