Analyzing the Relationship between Intra Industry Trade and Comparative Advantage for Iranian Economy

Document Type : Research Paper

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Abstract

The reality of today's international trading, imperfect competition and economies of scale resulting from show that a host country exporter, is also an importer of goods and services in which she has a comparative advantage. In other words, there is a bilateral trade based on Intra Industry Trade (IIT). In this article, IIT and its relationship with the comparative advantage of economies has been discussed. IIT as an index measuring the degree of globalization of economies during 2006-1997 in terms of two-digit (HS) has been calculated. The results indicate low volume level of IIT in trade with the world. Also, the results of estimating the model show a significant positive relationship between IIT and Revealed Comparative Advantage in the Iranian Economy.

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