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The Impact of Trade Openness, Labour and Capital on Manufacturing Value added in Iran


Affiliations
1 Department of Economics, Islamic Azad University, Tabriz., Iran, Islamic Republic of
2 Master of International Marketing Management in Aras University of Tabriz.
     

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One of the most fundamental issues in the economy‚ after World War II‚ particularly, in developing countries‚ is high economic growth. There are many factors which are effective in creating growth in these countries‚ the most important of these factors is increasing value added in productive goods and services in each country. In this aspect, we attempt to establish relationship between macro variables and manufacturing value added. Thus, in this research‚ the long-run and short-run relationship has been considered between the explanatory variables of labour‚ fixed capital and trade openness and dependent variable (the manufacturing value added). Method used in this study, is the Autoregressive Distributed Lag (ADRL) model in which the coefficients related to the dynamic models (short term and long term), Error Correction Method (ECM) in connection with the manufacturing value added are studied for Iran during the period of 1961-2006. The results show that the trade openness‚ both in the short term and in the long term has a significant and positive effect on Iran's manufacturing value added. Also, labour and capital variables have important impact on manufacturing value added both in the long-run and short-run relationship.

Keywords

Manufacturing Value Added, Trade Openness, Autoregressive Distributed Lag
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  • The Impact of Trade Openness, Labour and Capital on Manufacturing Value added in Iran

Abstract Views: 349  |  PDF Views: 2

Authors

Mohammad Reza M. Nahidi
Department of Economics, Islamic Azad University, Tabriz., Iran, Islamic Republic of
Gita Seif
Master of International Marketing Management in Aras University of Tabriz.

Abstract


One of the most fundamental issues in the economy‚ after World War II‚ particularly, in developing countries‚ is high economic growth. There are many factors which are effective in creating growth in these countries‚ the most important of these factors is increasing value added in productive goods and services in each country. In this aspect, we attempt to establish relationship between macro variables and manufacturing value added. Thus, in this research‚ the long-run and short-run relationship has been considered between the explanatory variables of labour‚ fixed capital and trade openness and dependent variable (the manufacturing value added). Method used in this study, is the Autoregressive Distributed Lag (ADRL) model in which the coefficients related to the dynamic models (short term and long term), Error Correction Method (ECM) in connection with the manufacturing value added are studied for Iran during the period of 1961-2006. The results show that the trade openness‚ both in the short term and in the long term has a significant and positive effect on Iran's manufacturing value added. Also, labour and capital variables have important impact on manufacturing value added both in the long-run and short-run relationship.

Keywords


Manufacturing Value Added, Trade Openness, Autoregressive Distributed Lag

References