Commercial Surveys

Commercial Surveys

Industrial Capability and Integration into the Global Economy: A Comparative Assessment of Iran’s Performance Relative to Selected Regional Economies

Document Type : Original Article

Authors
parisa Yaghoubi Manzari 1
Seyed Omid Aghamiri 2
1 Assistant Professor, Institute for Trade Studies and Research, Tehran, Iran
2 Researcher and university lecturer
10.22034/bs.2026.2078571.3190
Abstract
In the contemporary era, global production is organized around global value chains (GVCs). This article adopts a comparative-analytical approach to examine the relationship between participation in global value chains and industrial upgrading in four of Iran’s neighboring countries, namely Russia, Turkey, Saudi Arabia, and Kazakhstan) during the period 2013–2023. The research proposes a novel contribution by simultaneously examining participation indices (forward and backward linkages) and industrial value added at the four-digit ISIC industry level. The findings reveal distinct patterns of industrial development across countries. Turkey, with a participation index of 0.89, has achieved success without relying on extensive natural resources, through strategic intergration into GVCs and a shift towards higher value-added industries such as apparel and automotive. In contrast, Russia, with an index of 0.68 and a broad industrial base, ranks lower in GVC participation due to its reliance on resource exports. Iran, with an index of 0.52, performs better than Saudi Arabia (0.49) and Kazakhstan (0.48), indicating a relatively  diversied structure in its manufacturing sector. However, the gap with Turkey suggests that Iran has not sufficiently capitalized on its comparative advantages.
The Analysis of forward and backward linkages reveals the distinct roles of Turkey (a transformation-oriented economy), Russia (as a final demand market), Saudi Arabia (focused on developing downstream oil sectors), and Kazakhstan (as a primary commodities supplier). The results indicate that possessing natural resources is insufficient for success in industrial upgrading and GVC participation; rather, the formulation of a smart industrial strategy, targeted integration into the global economy, and investment in technology and innovation are key factors in achieving industrial upgrading and creating sustainable, high value-added growth. The article concludes by emphasizing the necessity for Iran to transition from a resource-based economy to a knowledge-based one and offers a set of policy recommendations.
Keywords
Manufacturing Value Added / Industrial Upgrading / Global Value Chains / Backward Participation / Forward Participation

Subjects

 
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Commercial Surveys
Volume 23, Issue 133 - Serial Number 133
September and October 2025
Pages 37-60

  • Receive Date 22 November 2025
  • Revise Date 16 February 2026
  • Accept Date 21 February 2026