Identifying Iran's Industrial Capabilities by Using Economic Complexity Model: Focusing on Export Markets of Selected Neighboring Countries

Document Type : Original Article

Authors

1 Faculty of Economics - University of Tehran

2 Faculty of Economics/University of Tehran

3 Department of Mathematics & Computer Science/Amirkabir University

Abstract

One of the newest and most advanced models to identify industries and products that should be targeted by the government of developing countries, is presented by Ricardo Hausmann. This model known as the economic complexity model measures the economic complexity index of each country's economy through a reciprocal relationship. This model shows that countries must produce a variety of products with a high degree of complexity and in close proximity of products which they have a comparative advantage in producing them, in order to become industrialized and developed. Analyzing Iran’s product space shows that out of 1259 goods in the 4-digit HS classification system, there are 45 commodities that producing these commodities improve the complexity of Iran's economy. Another part of any strategy to support selected industries, is to use the capability of international markets to export selected goods; by Considering the importance of the markets of 9 neighboring countries of Iran and after identifying their need for 25 commodities, there are 20 commodities with a market size of $12 billion, By Assuming the ability of Iran to capture half of this market, it will lead to a 1.3 percent growth in Iran's GDP.

Keywords

References

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Economic Strategy
Volume 10, Issue 38 - Serial Number 38
November 2021
Pages 425-461

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