International Competitiveness and Outward-Orientation Intensity in the Process of Trade Liberalization in Iran: A Dynamic Analysis

The improvement of competitiveness at national and international levels creates a proper environment to use opportunity in the process of globalization. Competitiveness is achievable through the allocation of resources based on the comparative and competitive advantages. Thus, the higher capability of competitiveness generates the higher profitability of activities during the globalization process. This study investigates the impacts of trade liberalization on international competitiveness and outward-orientation intensity. We use a dynamic analysis of difference-in-differences (DID) approach to fit panel data model using the data over the period 1974-2004. The model is identified and estimated for Iran's economic sectors. The sectors comprise manufacturing, agriculture, and services. The empirical results show that trade liberalization raises international competitiveness in the Iran’s economic sectors, while it reduces the intensity of outward-orientation in all those sectors.