A Survey of Foreign Trade Effects on Iran's Economic Growth

Foreign trade and its relation to economic growth is one of the very controversial subjects especially when it comes to choose among the development strategies in the developing countries, and still there is no consensus among economists as to how trade policies are related to economic growth rate. In the modern theories and endogenous growth models, international trade economic openness affects economic growth rate through getting access to foreign markets, technology and resources. The spotlight of this paper is on analyzing the effects of international trade on ecomomic growth. Having analyzed the literature and theoretical fundamentals of trade and production, the growth of trade transactions volume has been more than that of world production. This, in turn, shows that world production is made mostly according to the trade motivations, and hence the outward-oriented approaches to the world economic growth and development have gained more importance. Meanwhile, it was revealed that Iran's share in imports and exports is little in proportion to the world, and in the imports composition, there has been too much reliance on intermediate and imports composition, there has been too much reliance on intermediate and capital for a long-run period. Iran's exports concentration and high share of oil in its commodities exports are indicatives of insufficient variety and underdevelopment of national production structure as well as the fragility and vulnerability of trade in the country's economy. The results of model evaluation for the period within 1966-2001 by ARDL method indicated that international trade in the framework of "economic openness tate" indicator has positive effect on Iran's per capita GDP growth.