Effect of Technological Gap on Iran's Bilateral Trade Relations: a Semi-parametric Approach

At any given time, not only technological change creates non similar production functions among countries, but also it causes trade change over time. Technological explorations are not taking place in all countries and they do not spread to all countries at the same time. Therefore, countries use different technologies to produce products. In this paper, we have explained Effect of technological gap on Iran’s Trade Relations during 1995-2015. This analysis has been performed by estimating a semi-parametric gravity model and STATA is used for estimation. As expected, the estimation results of semi-parametric gravity model, which is based on a fixed effects approach, has shown that the effect of patent difference as a proxy for the technological gap on bilateral trade is significantly nonparametric. More specifically, the impact of the patent difference between the two trading partners has had a downward trend in some sub-process, while being upward in the rest of the process, in which it causes an increase in bilateral trade relations between Iran and its major trading partners.