JOURNAL OF SUSTAINABLE GROWTH AND DEVELOPMENT (THE ECONOMIC RESEARCH)
Year:2009 | Volume:9 | Issue:2|Papers Count:8

Relationship between trade, foreign direct investment (FDI) and economic growth in developing and developed countries has been always the center of attention either in theoretical or empirical point of view. This paper examines the impact of FDI and trade on economic growth in Iran using annual data over the period 1974-2005. This study uses an augmented aggregate production function (APF) model to investigate the impact of those relevant variables on economic growth. The APF assumes that along with conventional inputs of labor and capital used in the neoclassical production function, unconventional inputs like FDI and trade can be included in the model. To analyze the long run relationships among variables, an Autoregressive Distributed Lag (ARDL) cointegration procedure is employed. Moreover, error correction model is used to investigate short run relationship.The results indicate that FDI negatively affect economic growth only in the short run while trade positively effect economic growth both in the short run and in the long run. The capital stock and labor force have positive effect on economic growth over the short run and long run.

Poverty alleviation and income inequality reduction are one of the fundamental tasks of governments. Using the tax policy, governments can alter the economic circumstances of economic agents. So, this policy effectively effects the reduction of poverty and income inequality. The main objective of this paper is to investigate the effects of tax policy on poverty alleviation and reduction of inequality in income. The Atkinson inequality measures are employed in empirical model based on the literature. The measures comprise welfare elasticity and welfare reform indices. Moreover, the methodology used in this study is capable of answering the question whether tax policy is pro poor or pro rich.The stylized facts show that income inequality is increased in both rural and urban over the period 1379- 1382. The principal results of the model confirm that tax policy increases poverty and income inequality in the country.

The exports value of Iran's base metal industry ranked second among manufacturing industries after the petrochemical industry. Considering this stylized fact, the aim of the paper is to measure the competitiveness of Iran's base metal industry using the data over the period 2002-2005. This study uses Relative Export Advantage (RXA), Relative Trade Advantage (RTA), Constant Market Share (CMS) and Trade Map (TM) indices to measure competitiveness of this industry.The results of this study indicate that in spite of the existence of comparative advantage at major exportable products of Iran's base metals, there is no clear and stable trend of the competitive advantage in the products. Furthermore, the growth rate of relative export advantage of the products is fluctuating over the period 2002-2005. The same results have obtained based on trade map index. More specifically, there is no product which maintains competitive position throughout the whole period of this study. Finally, based on the constant market share which indicates the competitive performance of major export products in target markets, the competitive effect has generally no stability in the target markets, and it is frequently observed to have periodical variations in its values. These results are probably due to lack of sufficient attention to the factors of competitive advantage such as quality, efficiency and innovation, higher domestic consumption, higher production factor price. Based on the findings of the study, it is not sufficient to rely only on comparative advantages, but it is highly recommended that the attention should also be paid to competitive advantages.

The implementation of appropriate trade policies to curb a countries' trade deficit is among the main policy priorities of policy makers in most countries. The two-way causal relationship between a countries' foreign trade deficit and macroeconomic variables such as the relation between the terms of trade (TOT) and exchange rate has further complicated the research in this area. Hence, the knowledge of such relationship and an understanding of bidirectional effects clarify and shed light on the proper macroeconomic policies in obtaining equilibrium in the foreign sector of countries. In this article an attempt is made to look into the mechanism of the foreign trade deficit in the short run and the long run. A Structural Vector Error Correction Model (VECM) is employed to investigate these relationships using the data over the period 1959-2005.The results indicate that a stable long run relationship exists between the foreign trade deficit and terms of trade. Moreover, a significant long run relationship exists between real exchange rate and trade deficit. The findings confirm that the devaluation of the domestic currency is able to improve the trade deficit at a rate of 1.33. The short run results indicate that trade deficit reverts quickly to its equilibrium level. The estimated coefficient is -0.65 and it is significant at the 5 percent level.

Productivity is used as a measure to evaluate the optimal allocation of resources in achieving the maximum production. This paper aims to examine changes in Total Factor Productivity (TFP) of the Iran's stock market using both parametric and non-parametric estimation methodology. The data set used in this study cover the period 1991 - 2006. According to the five-year 4th development plan, 2004 - 2008, all economic sectors have set a TFP target to contribute to economic growth. The share of annual productivity growth of service sector including financial sector is set 21.9 percent over the five-year 4th development plan. Moreover, the annual growth rates of labor, capital and TFP are set 6.5%, 1.6%, 2%, respectively, over the same period.Using a linear programming method as a non-parametric method, technical efficiency of Tehran stock market is evaluated. Tornqvist index is employed to compute the changes in TFP. The results show that the annual average growth rate of TFP is 0.92 percent in Tehran stock market. This rate is beyond the target of the five-year 4th development plan which is 2.0 percent.

Money is viewed as a cash asset with special characteristics. Like other financial assets, demand for money is a part of portfolio selection process in which individuals' wealth is allocated to among various assets based on their rates of return and risks. However, empirical settings of money demand function is important from the point of the view of monetary policy. Therefore, the specification of the determinants of money demand and its functional form are crucial.The main aim of this study is to examine the determinants of demand for and velocity of money in both theoretical and empirical aspects emphasizing the function of stock market volatility. It is well known that during the process of economic decisions and policy making there must be numerical and exact indices to assess the effects of the relevant variables and indicators on the dependent variables. In this study, the volatility of stock market is included in the models as a proxy for market risk. ARDL approach is employed to estimate the specified models. Moreover, the stability of the coefficients is tested using CUSUM and CUSUMSQ tests. Seasonal data are used to estimate the model. The data set is used covers the period 1992- 2007.The results of this study show that when the narrow definition of money (M1) is used in the model, there is a long run relation among the variables included in the model. The estimated coefficients of real income and inflation are statistically significant and the signs of the parameters are consistent with the theory. However, the coefficients of free market exchange rate and the volatility of stock market are not statistically significant. The results of stability tests indicate that the estimated coefficients are stable over the period 1992 -2007.

The purpose of this study is to investigate the technical efficiency of Wheat production in the provinces of Iran. To this end, a panel data approach as well as data envelope analysis and stochastic frontier approaches are employed using the data over the period 1999- 2002.These two latter approaches are used to evaluate the robustness of the results. The findings of the parametric approach show that the average technical efficiency of wheat production is 0.75 in Iran over the period 1999 - 2002. According to this approach, Gilan and Bushehr provinces are ranked the highest (0.81) and lowest (0.26) technical efficiency among the provinces, respectively. The findings of the non-parametric approach indicate that the average technical efficiency of wheat production is 0.84 in Iran during the same period. Sistan, Kohgiluyeh and Boyrahmad, Gilan, and Mazandaran Provinces reach 100 percent technical efficiency. However, Yazd is ranked the lowest level of technical efficiency with 57 percent among all provinces.

This article aims to clarify the meaning of the term "political economy" in various contexts and propose the most appropriate meaning for it. It then gives a concise definition of various theoretical approaches to political economy used in different contexts and classifies them in six categories. After a brief critical review of the various approaches and considering some methodological issues, this paper concludes that rather than considering political economy as a specific "theory", political economy should be considered as a "research plan."