Iranian Economic Review
Volume:13 Issue: 22, Summer 2008

In this paper the relation of underground economy and tax gap in Iran has been examined. The results show that the underground economy size is almost 20 percent of GDP in Iran. In this research three methods of estimation of underground economy size has been used and combined to achieve a more precise estimation. The methods that have been used are: cash, fuzzy and latent variable methods. The size of tax gap in Iran has been over 30 billion dollars in recent years. Some new payment systems as ATM cause change in money velocity which makes it necessary that new factors to be taken into account

This paper tries to test the relationship between trade openness and economic growth in Iran, as well as some OPEC Nations. By using panel data we investigated the hypothesis that trade openness through its special mechanisms positively affects the economic growth of these countries. The results show that the oil exports have negative effect on economic growth of these countries.

Most developing countries try to “reduce production costs” to be able to increase their exports to the competitive international markets. The process of economic globalization has winners and losers. Surging international trade has lowered the share of Iran's labour-intensive exports, especially Persian Carpets, in international markets; as the production costs of its rival countries are lower. The findings of this research and the results of the survey which was conducted in Kashan show that rise in international trade has reduced Iran's competitiveness in labour intensive exports and the increased the share of resource based exports. As, harsh international competition in conquering hand-woven carpet markets has reduced real wages of carpet-weavers and has restructured the labour force of the carpet industry in Iran. The middle income families, who were involved in carpet-weaving for long time, have left the industry and Afghan immigrant workers increasingly substitute Iranian middle class weavers. The estimated econometric model also indicates that by increasing real income, many workers leave low-paid carpet weaving jobs. So, Iran's share in international hand-woven carpet markets would be lower, if low-paid women and Afghan workers were not concentrated in Iran's hand-woven carpet industry.

Higher education, through increasing the human capital stock of individuals, improves productivity and therefore contributes to economic growth. From economic point of view, this type of expenditure is considered as a long-run investment which increases growth rate and forms a higher capacity of human capacity. The implication is that a dynamic relationship between growth rates of education, income and investment can be implemented in a specific time path. This paper employs ARDL and Panel Data modeling to test the causal relationship between real income, real investment and human capital using data for the 16 selected OIC members over the period 1980-2005. The empirical results approve a long-run effect of human and physical investments. The results also imply a crucial rate of human capital which will play in the future developments of the OIC countries.

In this study, we attempted to determine the key factors leading to economic growth for Iran economy over the period 1960–2006. In particular, we sought to clarify whether the growth of Iran was driven mainly by factor accumulation or by improvements in efficiency namely, debate of K (factor accumulation) versus A (productivity gains). The analysis of the sources of growth shows that the role of Total Factor Productivity (TFP) in determining economic growth is insignificant and often detrimental. Most of the growth is due to the accumulation of physical capital and improvements in the quality of labor. Thus, we conclude that in the debate of A versus K we take the side of K. Bases on the experiences of Iran as a oil dependent country, accumulation of capital seems to be the major determinant of economic growth.

In May 2004, ten countries joined the European Union. Most of these countries that are located in the central and eastern part of Europe have different historical background and economic structure, compared to the older EU members. One of the pertinent issues of EU Accession is the economic consequences for the countries neighboring the enlarged EU and the impact on trade of between these countries. The implication of regional economic cooperation and competition for all the EU members and countries located further to the East of EU, including countries in the Middle East and Central Asia in terms of resource allocation, the concentration of economic activities and its welfare implications, all depends upon how the new economic opportunities are exploited. The main purpose of this paper is to measure the degree and extent of comparative advantage in agricultural crop production and to compare the results for the enlarged European Union and countries located further toward the eastern frontier of the EU. The Bowen comparative advantage index as well as a simple regression model will be used in this regard. This paper will highlight the relative strengths and weaknesses of the countries in this ‘bloc” in exploiting their agricultural trade potential.

This paper, first, represents theoretical aspects of rational bubbles. Second, it shows one of the tests introduced to detect rational bubbles- integration/ cointegration based test. Finally, on the empirical side, it explores existence of both explosive and periodically collapsing bubbles in Tehran Stock Exchange. The results reject the existence of explosive bubbles but fail to reject the existence of periodically collapsing ones.

This paper examines the interaction between openness, growth, and development using a panel of ten developing East Asian countries (China, Japan, Korea, Malaysia, Indonesia, the Philippines, Singapore, Hong Kong, Macao and Vietnam) and five-year averages for the period, 1975-2005. Its primary objective is to determine whether there is a direct link between the level of development and openness, while controlling for the indirect effect of openness through its impact on economic growth. Using a two-equation simultaneous-equations model of development and growth and an alternative measure of openness, our findings suggest that openness has a positive influence on both economic growth and human development. We also find that while economic growth makes a positive contribution to development, the converse is not true in that the more developed a nation the slower its growth rate.