Analyzing the Causal Relationship between Exchange Rate and Revealed Comparative Advantage and Studying RCA Indices in Iranian Selected Industries

The present paper assesses the trend of the selected industry's trade in the country based on the Balassa’s Revealed Comparative Advantage Index, based on the SITC classification for the period 1359-1394. Based on the results, the revealed comparative advantage for the fuel and minerals industry in all periods suggests a revealed advantage, but the trend is downward. The combined analysis of the revealed comparative advantage of export, imports, trade and the net export flow for industries show that the industries based on oil, gas and minerals in the country have the required capacity to be the core of development plan But it is not possible for industries based on specific knowledge and technology, such as the IT industry. According to the revealed comparative advantage of import, the results show that the dependence of industries on imports is not undeniable. There is a causal relationship between the exchange rate and the fuel and minerals industry. Accordingly, it is suggested that industries whose revealed comparative advantage of export is absolute, such as petrochemicals, are selected as key industries of development.