The Effect of Political Institutions on Iranian Export to Major Trading Partners in Different Commodities Groups

Trade and export development policies have great importance in countrie's economic development and financing. According to new international trade theories, export is a function of price and non-price variables. Among the non-price variables that have recently attracted the attention of institutionalized economists, the variables of political institutions by reducing transaction costs in trade, provides an appropriate field for further export development. The purpose of this paper is to investigate the empirical analysis of the effect of political institutions on Iranian export to major West Asian trading partners in the framework of the gravity model using the panel data method which six-digit data based on the harmonized system classification (HS) is used during 2009 to 2014. The results of estimated models show that institutional variables (political) along with indicators of economic freedom and financial freedom have a positive effect on Iranian export to West Asian trading partners in eight commodities different groups that is confirmed in high level of significance. Improvement of institutional variables by reducing business risk, motivating economic activists provides entry to world markets and is considered as an important step forward in export development.