Commercial Surveys

Commercial Surveys

Export Diversification and Income Inequality in Iran

Document Type : Original Article

Authors
1 M. A. of Economics, Faculty of Economics, Management and Administrative Sciences, Semnan University, Iran
2 Assistant Professor of Economics, Faculty of Economics, Management and Administrative Sciences, Semnan University, Semnan, Iran
Abstract
 
The present study aimed to examine the effect of export diversification on income inequality in Iran using the autoregressive distributed lag (ARDL) approach and data for the period 1984 to 2018. To this end, the Gini coefficient was employed as the income inequality index and non-oil export diversification was calculated using Herfindahl-Hirschman index and considering the export value of various export goods.
The results of the cointegration test show that diversification initially increases income inequality but after reaching a certain amount it causes to a decrease in income inequality. The results prove an inverted U-shape relation between income inequality and export diversification. Also, the empirical results indicate that there is an inverted U-shaped relationship between per capita income and income inequality, thus confirming the Kuznets curve hypothesis. On the other hand, the empirical results show that an increase in the size of the government leads to an increase in income inequality, but the inflation rate does not have a significant effect on inequality. These findings have important policy implications in order to improve export diversification to reduce income inequality.
Keywords

Subjects


 
Abounoori, E., & Gholami, N. (2012). Industrial Structure in Iran and the Correlation between Concentration Variables. Journal of Economic Research (Tahghighat-E-Eghtesadi), 46(3), 21-43. [In Persian]
Ahmadi Shadmehri, M., Ghaed, E., & Moradi, M. (2019). The Influencing Factors of Income Inequality in Iran with Emphasis on the Role of Migration and Urbanization. Population Policy Research, 5(1), 127-147. [In Persian]
Albassam, B. A. (2015). Economic diversification in Saudi Arabia: Myth or reality?. Resources Policy, 44, 112-117.
Anderson, E. (2005). Openness and inequality in developing countries: A review of theory and recent evidence. World development, 33(7), 1045-1063.
Anvari, E., Ahangari, A., Kazemifard, A., & Chasebi Nezhad, L. (2021). Risk Analysis and Diversification of Iran’s Non-oil Export: Application of Nonparametric and Semiparametric Methods. Journal of Economics and Modeling, 12(3), 33-70. [In Persian]
Aradhyula, S. V., Rahman, T., & Seenivasan, K. (2007). Impact of international trade on income and income inequality (No. 381-2016-22241).
Azarbaiejani, K., Raki, M., & Ranjbar, H. (2011). The impact of export diversification on total factor productivity and economic growth (panel data method in D-8 countries). Economic Growth and Development Research, 1(3), 201-165. [In Persian]
Azizi, Z., Pedram, M., & Azizi, P. (2018). The role of export diversification on the relationship between trade openness and volatility of economic growth in selected developing countries (1980-2015). Iranian Journal of Economic Research, 23(77), 107-138. [In Persian]
Blancheton, B., & Chhorn, D. (2019). Export diversification, specialisation and inequality: Evidence from Asian and Western countries. The Journal of International Trade & Economic Development, 28(2), 189-229.
Brown, R. L., Durbin, J., & Evans, J. M. (1975). Techniques for testing the constancy of regression relationships over time. Journal of the Royal Statistical Society: Series B (Methodological), 37(2), 149-163.
Brown, R. L., Durbin, J., & Evans, J. M. (1975). Techniques for testing the constancy of regression relationships over time. Journal of the Royal Statistical Society: Series B (Methodological), 37(2), 149-163.
Faustino, H. C., & Vali, C. (2011). The effects of globalisation on OECD income inequality: a static and dynamic analysis. DE/Working papers nº 12/2011/DE.
Galli, R & R. Vander Hoeven. (2001). Is Inflation Bad for Income Inequality: The Importance of the Initial Rate of Inflation, Employment Paper, 2001/29, ILO
Hesse, H. (2009). Export diversification and economic growth. Breaking into new markets: Emerging lessons for export diversification, 55-80.
Jalaee, S. A., & Gorgini, M. (2020). The Investigation of Foreign trade effect on Income disturbance between each rural income deciles of Iran. Quarterly Journal of Fiscal and Economic Policies, 8(31), 77-112. [In Persian]
Jalil, A. (2012). Modeling income inequality and openness in the framework of Kuznets curve: New evidence from China. Economic Modelling, 29(2), 309-315.
Le, T. H., Nguyen, C. P., Su, T. D., & Tran-Nam, B. (2020). The Kuznets curve for export diversification and income inequality: Evidence from a global sample. Economic Analysis and Policy, 65, 21-39.
Lee, C. C., Yuan, Z., & Ho, S. J. (2022). How does export diversification affect income inequality? International evidence. Structural Change and Economic Dynamics, 63, 410-421.
Li, D., Wang, X., Xu, Y., & Ren, Y. (2022). Analysis of Export Diversification and Impact of Globalisation on Income Inequality: Evidence from Asian Countries. Global Economic Review, 51(3), 195-215.
Maleki, A. (2011). Diversification in Non-Oil Export of Iran with Introduction of a New Index. Journal of Economic Research and Policies, 19(58), 79-106. [In Persian]
Meamarnejad, A., Emamverdi, G., & Shayesteh, A. (2008). An Analysis of export diversification effects on economic growth in Iran after revolution. Financial Economics, 2(3), 37-54. [In Persian]
Mehregan, N., Musai, M., & Keihani Hekmat, R. (2008). The economic growth and income distribution in Iran. Social Welfare Quarterly, 7(28), 57-87. [In Persian]
Meschi, E., & Vivarelli, M. (2009). Trade and income inequality in developing countries. World development, 37(2), 287-302.
Mitra, R., & Hossain, M. S. (2018). Does Trade Openness Increase Income Inequality in the United States?. The Empirical Economics Letters, 17(10), 1185-1194.
Mohammadi, H., & Fakari, B. (2015). Analyzing the effect of the institutional infrastructure and macroeconomic variables on the diversity of Iran’s exports Using Ridge Regression, Quarterly Journal of the Macro and Strategic Policies, 3(11), 75-94. [In Persian]
Munira, S., Kianib, A. K., Khanc, A., & Jamald, A. (2012). The Relationship between Trade Openness and Income Inequalities Empirical Evidences from Pakistan. Academic Journal of Management Sciences ISSN, 2305, 2864.
Nademi, Y., & Hasanvand, D. (2015). The Threshold effects of government size on income inequality in Iran. Planning and Budgeting, 20(3), 125-143. [In Persian]
Nasiri, H., Nonezhad, M., Haghighat, A., & Ebrahimi, M. (2020). The Effects of Diversification of Industrial Exports on the Instability of Foreign Exchange Earnings in Iran’s Industrial. Economic Modelling, 14(50), 27-52. [In Persian]
Nematollahi, S., & Garshasbi, A. (2014). Investigation of the non-oil export diversification in the status of the international sanctions for the period (2004-2012). Economic Growth and Development Research, 4(14), 92-75. [In Persian]
Nezhadabdolah, M., Mohtashami Borzadaran, G. R., & Yaghoobi, M. (2013). Income distribution indicators in Iran. Economic Journal, 13(9 & 10): 49-64. [In Persian]
Nilli, M., Farahbakhsh, A. (1998). The relationship between economic growth and income distribution. Quarterly Journal of Planning and Budgeting, 3(10 & 11): 121-154. [In Persian]
Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of applied econometrics, 16(3), 289-326.
Polpibulaya, S. (2015). Trade Openness and Income Inequality, Clemson University, All Theses, 2505.
Ranjbar, H., Iranmanesh, M., & Mohammadi, M. (2011). Effect of trade specialization pattern on economic growth in MENA countries. Economic Modelling, 5(4), 57-70. [In Persian]
Reuveny, R., & Li, Q. (2003). Economic openness, democracy, and income inequality: An empirical analysis. Comparative Political Studies, 36(5), 575-601.
Rezaloo, R. (2015). Investigating the impact of foreign trade on income distribution in selected countries of the world. The 3rd International Conference in Management, Economics and Accounting, Tabriz. [In Persian]
Samadi, A. H. (2002). Export diversification and economic growth in Iran (1968-1998). Quarterly Journal of Planning and Budgeting, 6(11 & 12): 165-201. [In Persian]
Shakeri, A., Jahangard, E., & Aghlami, S. (2014). The nonlinear effect of inflation on income inequality in Iran. The Economic Research, 13(4), 27-53. [In Persian]
Vojdani, H., & Ali Razini, E. (2013). Investigating and Analysis of Diversity in Target Export Markets of Iran. Journal of Economics and Regional Development, 19(3): 25-55. [In Persian]
Yarahmadi, M. M., Rafat, M., & Tayebi, S. K. (2022). Determinants of Iran’s Export Diversification: Emphasis on the Cost of Entrance to Domestic and Foreign Markets. Iranian Journal of Economic Research, 26(89), 131-154. [In Persian]
Zakaria, M., & Fida, B. A. (2016). Trade openness and income inequality in China and the SAARC Region. Asian‐Pacific Economic Literature, 30(2), 33-44.
 
 
Volume 21, Issue 122 - Serial Number 122
November and December 2023
Pages 89-104

  • Receive Date 12 March 2023
  • Revise Date 07 April 2023
  • Accept Date 15 April 2023