An Analysis of the Effects of Factors of Production on Foreign Trade in Iran

This paper examines the impact of the factors of production regarding their labour-intensive or capital-intensive properties on exports and imports in Iran during the three time periods of 1370, 1376 and 1382 using input-output model based on constant prices. The principle hypothesis of this research work is that regarding the utilization of labour and capital in exports and imports sectors, Iranian economic activities are based on relative advantage of the factors of production. Importing industries which account a high percentage of Iranian imports such as chemical industries, manufacturing and basic metals are among those sectors which are relatively more capital intensive regarding their exports as compared with their imports. Those industries which have higher share in nonoil exports, such as wood industries and wood product, agriculture, transportation, textile and commercial services are among the economic activities with lower capital-labour ratio, i.e., are relatively labour-intensive.