international trading
Seyedeh Marveh Nasersadrabadi; Farhad Ghaffari; Teymour Mohammadi; Abbas Memarnejad
Abstract
The negative consequences of financial crises require the attention of economic policymakers and decision making centers.Therefore, considering the importance of the subject, the present study has investigated the effects of global financial crises on the trade patterns of Iran and its partners during ...
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The negative consequences of financial crises require the attention of economic policymakers and decision making centers.Therefore, considering the importance of the subject, the present study has investigated the effects of global financial crises on the trade patterns of Iran and its partners during the years 1995-2018.The variables have been estimated in the framework of the gravity model using the pseudo poisson maximum likelihood method.The findings show that the Asian financial crisis (1997) has an effective role in reducing the volume of trade but this result is the opposite in relation to the American financial crisis (2007); Because instead of a threat, it has become an opportunity for the movement of business flows. In this situation, it seems that the difference in the intensity and type of impact of financial crises on trade patterns can be affected by the nature of the crisis or the region where the crisis started.1.IntroductionCountries consistently grapple with economic and financial turmoil, which at specific junctures, can escalate into full-fledged financial crises (Moshiri & Nadali, 2013). These crises manifest as conditions where a significant number of financial institutions suddenly experience a substantial decline in the nominal value of their financial assets (Bonis et al., 1998). Given the historical recurrence of financial crises worldwide, it becomes imperative for economic policymakers and decision making centers to address and mitigate their adverse effects. This necessity stems from the detrimental impact that financial crises have on the real sector of economy (Kord-Zangeneh et al., 2019). Compounding the issue is the transnational nature of these crises, as they may transfer from one country to another. The transmission of financial crises occurs through various channels, including trade flows, foreign direct investment, commercial loans and financial aid (Massa & Velde, 2008). Among these channels, trade relations emerge as crucial communication pathways on a global scale, playing a pivotal role in influencing the performance of diverse economic sectors affected by financial crises.Hence, understanding international trade patterns holds greater significance than any other phenomenon in the economy, particularly in times of crisis. Furthermore, drawing insights from the experiences of other nations aids in understanding how trade flows unfold in countries that have recently weathered financial crises (Santana-Gallego & Perez-Rodriguez, 2018). Financial crises impact on the trade in two ways. First, they exert a negative influence on trade by disrupting the trade balance. Then crises transfer from one affected country to another through interconnected trade links. Consequently, the extent to which different countries engage with the global economy dictates the degree to which they are affected by the repercussions of a financial crisis.As countries are interlinked through trade flows, in the event of a shock impacting one economy, it has the potential to extend to the entire network, indirectly influencing trade relations between countries. This connection is particularly crucial because a financial crisis can transfer to other economic sectors through fluctuations in exchange rate variables, exports, imports and changes in international commodity prices (Brave & Butters, 2011).2.Materials and MethodsThe gravity model, proposed by Tinbergen (1966) to explain bilateral trade flows, is distinctive for its emphasis on reflecting international relations. In the field of international trade studies, traditional challenges arise in estimating the gravity model. Specifically, when employing the ordinary least squares method for estimating the gravity model, there is a tendency to exclude zero statistical observations. This limitation stems from the conventional method’s inability to compute a logarithm for the trade variable when trade between countries is not realized in certain years. Consequently, the omission of statistical observations in such instances renders it impossible to generate a zero logarithm. Moreover, when the model is estimated using the non-linear least squares method, there is a potential issue with the heterogeneity of variance, which can compromise the accuracy of interpretations based on the coefficients. Recognizing this challenge, Santos-Silva and Tenreyro (2006) introduced the Poisson pseudo maximum likelihood method to address the estimation of such models. A noteworthy aspect of this method is the non-elimination of zero statistical observations, ensuring unbiased and reliable estimation of variable coefficients. This is achieved by assigning equal weight to all statistical observations. Therefore, the method not only increases the number of statistical observations but also enhances the efficiency of the estimator.The main estimation approach revolves around the Poisson pseudo maximum likelihood method, as explained by theoretical foundations and existing literature that detail the connection between financial crises and international trade. This approach draws inspiration from the works of Santos-Silva and Tenreyro (2006) as well as of Santana-Gallego and Perez-Rodriguez (2018). In this respect, the research model was delineated following the model proposed by Glick and Rose (2016), as shown in Equation (1). (1) The present study aimed to investigate trade patterns by examining the volume of bilateral trade (total export and import) between Iran and its twenty trading partners. The analysis used annual data spanning from 1995 to 2018. The study developed the proposed model, leveraging the flexibility inherent in the gravity model as well as incorporating variables such as the logarithm of the Linder economic similarity index, the logarithm of Iran’s and its trading partners’ populations, the logarithm of the nominal exchange rate, the logarithm of geographical distance and financial crises. This comprehensive formulation is defined as the generalized gravity model expressed in Equation (2). (2) 3.Results and DiscussionDiagnostic tests are imperative before model estimation. Initially, the Chow test was employed to determine the suitable regression method. Subsequently, the Hausman test was used to decide between the methods of fixed effects or random effects.Table 1. Diagnostic testsResultProbabilityStatisticsTestNull Hypothesis Rejected0.00023.04ChowNull Hypothesis Rejected0.000437.51HausmanSource: Research findings The results outlined in Table 1 demonstrate the rejection of the null hypothesis in both the Chow and Hausman tests. To control the multilateral resistance to trade, the study estimated the coefficients of the variables by considering the country’s annual fixed effects. The process was conducted within the framework of the gravity model, employing the Poisson pseudo maximum likelihood method (see below).Table 2. Model estimation resultsProbabilityStandard deviationCoefficientsVariables***0.0000.000-0.179CRIijt 1997***0.0000.0000.135CRIijt 2007***0.0000.184-32.358LnLINijt***0.0005.9153.005LnPOPit***0.0000.1000.111LnPOPjt***0.0000.0000.017LnERijt***0.0000.000-0.400LnDISijt***0.0000.113-52.430CNumber of obs = 240R-Squared = 0.81Pseudo Log Likelihood = -171.405*** Indicates the significance of the coefficients at the level of 1 percent.Source: Research findingsThe results provided in Table 2 reveal that global financial crises exerted a significant impact on the trade volume, yet the nature of their influence on trade patterns varies. Specifically, the findings indicated that the Asian financial crisis of 1997 played a substantial role in reducing the trade volume, while the outcome was opposite in the case of the American financial crisis of 2007.The negative coefficient in the logarithm of the Linder economic similarity index indicates that the volume of trade increases as the per capita income difference decreases. Consequently, the countries with similar tastes or demand structures become the optimal markets for a country’s export goods.Conversely, the positive coefficient in the logarithm of the population of Iran and its trading partners signifies that an increase in population correlated with a rise in the trade volume. This association can be attributed to the utilization of a larger labor force, inherent in higher population figures, which positively affects the production of goods. The outcome is manifested in an increase in the trade volume.The positive coefficient in the logarithm of the nominal exchange rate indicates an increase in trade volume corresponding to an increase in this variable. This pattern emerges because foreign goods become more expensive compared to domestic ones. Consequently, both domestic and foreign consumers are inclined to substitute Iranian goods with foreign alternatives. Conversely, the negative coefficient in the logarithm of geographical distance reveals that this variable exerted a negative impact on the trade volume. In other words, the greater the distance between countries, the higher the transportation costs. As a result, distant markets become less attractive for establishing trade relations.4.ConclusionThe present study examined the effects of global financial crises on the trade patterns of Iran in relation its key trading partners. In this respect, the research used annual data from the studied countries during 1995–2018, then the coefficients of the variables were estimated within the framework of the gravity model as well as the Poisson pseudo maximum likelihood method.According to the findings, the examined countries experience the repercussions of financial crises, yet the magnitude and nature of their impact differ based on the specific characteristics of each crisis. In this context, the Asian financial crisis of 1997 played a significant role in reducing the trade volume in the countries under consideration, while the outcome was opposite in the case of the American financial crisis of 2007. Moreover, the positive coefficients of the variables specifically the logarithm of the Linder economic similarity index, the logarithm of the nominal exchange rate and the logarithm of the population of Iran and its trading partners underscore their favorable impact on the trade volume aligned with the increased trade flows in the countries. Given the negative coefficient in the logarithm of geographical distance, it is anticipated that trade with countries farther away from Iran will be comparatively lower. In fact, the majority of Iran’s trade relations are established with neighboring countries. In light of these findings, it is recommended to implement trade policies that support export-oriented domestic production in the country. This approach, in addition to generating foreign currency income, can serve as a mitigating factor against the adverse effects of financial crises.
international trading
Abolfazl Shahabadi; Farideh Arefkhani; Maryam Aliyari
Abstract
Migration is a global phenomenon that is driven by a variety of reasons, which can be categorized as push and pull factors. Push factors refer to negative circumstances that compel individuals to leave their country of origin and seek a better life elsewhere. In contrast, pull factors are positive conditions ...
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Migration is a global phenomenon that is driven by a variety of reasons, which can be categorized as push and pull factors. Push factors refer to negative circumstances that compel individuals to leave their country of origin and seek a better life elsewhere. In contrast, pull factors are positive conditions that attract individuals to a particular destination. These may include better job opportunities, greater security, better healthcare, and improved educational opportunities. It is important to note that the push and pull factors that influence migration can vary depending on an individual’s characteristics.In recent decades, one of the most significant developments in migration in developing countries has been the increasing participation of women in migration flows, including their growing independent migration to developed countries. Women represent a significant portion of human capital in these communities, so their involuntary migration can have negative impacts on the development process. It is thus crucial to identify and understand the underlying factors of women’s migration, which can inform appropriate policies to address the issue. The present study used experimental data from 28 developing countries and the generalized method of moments (GMM) to examine the interactive effect of globalization and entrepreneurship on women’s international migration during 2011–2020. The results indicated that improving women’s entrepreneurial conditions has a significantly negative impact on international migration, while increasing the level of education and poverty index can have a significantly positive impact. However, the social, political, and economic aspects of globalization moderate the negative effect of entrepreneurship on women’s international migration. In other words, with the reduction of barriers and geographical boundaries, women are more willing to engage in entrepreneurship and gain new job experiences in a different country. Moreover, improving the index of gender equality and individual freedoms in the country can have a significantly negative effect on the process of international migration of women. Policymakers can reduce migration by improving gender equality and individual freedoms, revising laws and regulations related to women’s business space, and supporting entrepreneurship.IntroductionIt is crucial to understand the gender complexities surrounding women’s international migration to maximize the benefits of migration for women— who constitute half of the migrant population—and to minimize its socio-economic costs for them, their families, and their countries of origin. This understanding can also help prevent negative consequences in immigration destinations. Women often migrate internationally to escape social restrictions or to improve their families’ living conditions and provide a better prospect for their children. However, excessive migration, especially among young women with high education and skills who are in their reproductive age, can have dangerous consequences, such as exacerbating the demographic crisis, destabilizing the family foundation, and reducing economic growth at the national level.The history of independent international migration of women, separate from men and families, only dates back to the last few decades. Therefore, a comprehensive understanding of the reasons behind this phenomenon requires consideration of the new and emerging variables affecting human society and women’s lives. One such variable is globalization, which eliminates geographical borders and allows for the free flow of ideas, goods, services, and capital.In addition to eliminating geographical borders, globalization has facilitated the movement of people and labor between different countries, which has also affected women’s international migration. In addition to eliminating geographical borders, globalization has facilitated the movement of people and labor between different countries, which has also affected women’s international migration. Furthermore, the growth of women’s economic participation and entrepreneurship has increased their material independence, which has influenced their international migration. Finally, increasing the degree of social, economic, and political globalization of countries by providing the ground for women’s entrepreneurship can also affect their international migration.The structural approach emphasizes that women’s migration is influenced by a variety of factors, each with varying degrees of effectiveness. Moreover, the economic, social, and political structures of the host society play a significant role in women’s decision-making regarding international migration. Women’s income and financial independence are crucial factors in their decision to migrate, which is directly influenced by women’s entrepreneurship. In fact, entrepreneurial power enables women to take advantage of opportunities in different parts of the world. Entrepreneurship is the basic driver of social health and wealth and a powerful engine of economic growth that promotes the necessity of innovation. Entrepreneurship is not only necessary to take advantage of new opportunities, improve productivity, and create employment but also to address some of the biggest challenges of society (Women’s Entrepreneurship Report, 2021). Innovative women entrepreneurs bring new solutions to the market with new sources of value that are not provided by competitors. International entrepreneurs outside their national borders also contribute to the global competitiveness of their country’s economy.Materials and MethodsThe study used multivariate regression analysis, a panel data approach, the generalized method of moments (GMM), and Stata software to estimate the interactive effect of globalization and entrepreneurship on women’s international migration. The statistical population of the study consisted of 28 developing countries used as the study sample. The model included the women’s international migration index as the dependent variable, while social, political, and economic globalization, women’s education, economic misery index, gender equality, and individual freedoms were considered as explanatory variables and effective factors of women’s migration.Results and DiscussionThe research model utilized in this study is a panel data type, which provides a more efficient estimation by limiting the problem of heterogeneity of variance, reducing collinearity between variables, and increasing the degree of freedom compared to cross-sectional data and time series (Baltaji, 2005). In addition, the present research model can be considered as dynamic according to De Brau (2019) and Sultana and Fatima (2017), where the dependent variable intercept appears as an explanatory variable on the right side of the equation. The mathematical expression of the model is as follows: The dependent variable of the model is International Migration of Women (MWit), and the explanatory variables include social (SGit), political (PGit), and economic (EGit) globalization, Women’s Entrepreneurship (WENTit), Women’s Education (WEDUit), Economic Misery index (EMit), Gender Equality (GEit), and Personal Freedoms (PFit).This research used a dynamic panel data model in which the dependent variable appears as an explanatory variable with an interval on the right side, a correlation is created between the disturbance component and the mentioned variable, and the estimation results are skewed. Therefore, the GMM was used to estimate the variables. This method does not require detailed information on the distribution of disturbance sentences, based on the assumption that the disturbance sentences in equations with a set of instrumental variables are not correlated. Two tests were conducted to ensure the suitability of GMM for model estimation. The Sargan test was used to test the validity of instrumental variables. A Sargan statistical probability value greater than 5% indicates the non-correlation of the instruments with the disturbance components, and hence, the instruments used in the estimation are valid. Second, the first-order AR(1) and second-order AR(2) residual correlation tests were employed. The results indicated that there is first-order serial correlation in all cases of estimation of disturbance sentences, but there is not second-order serial correlation or clear distortion. Table 1. Estimation results of the research modelSecond StateFirst StateDependent variable: International migration of woment StatisticCoefficientt StatisticCoefficientExplanatory Variables▼6/0060/1876/0430/192LnIMW (-1)------3/4610/158LnSG------2/4120/035LnPG------3/9560/163LnEG-------4/208-0/179LnWENT3/7180/102------LnSG*WENT2/2560/061------LnPG*WENT3/4800/147------LnEG*WENT3/1140/2243/1650/231LnWEDU2/0170/0612/0260/058LnEM-5/512-0/346-5/387-0/351LnGE-4/968-0/186-4/914-0/190LnPF0/6126/1750/6086/03Sargan test statistic0/0000/0530/0000/057AR(1)0/7030/310/6910/30AR(2)228228Number of obs88Number of group2828Obs per groupConclusionAs economic, social, and political globalization increased in selected countries, so did the migration of women. The dissolution of geographical borders, the inability of developing economies to compete with developed counterparts, the disappearance of subcultures, and the familiarity of women with the culture and language of the destination countries all contributed to the increase in women’s international migration. Moreover, extroversion in foreign policy and the conclusion of understandings and bilateral/multilateral agreements of regional and international organizations for regular, easy, quick, and low-cost legal migration procedures also play a role in this context. The increasing trend of migration of skilled and expert women from developing countries to developed countries often results in improved employment opportunities, greater material benefits, and higher social status for these women.The establishment of entrepreneurship as a viable career path for women, along with equal business opportunities as men, and the ability to implement women’s creative plans and ideas in developing countries, could lead to their strong presence as valuable members of society. This, in turn, would strengthen women’s self-confidence and motivation to migrate, while also reducing the push factors for emigration.Gender equality in the home country can increase women’s hope of achieving a better life and reduce their desire to migrate abroad. In addition, individual freedoms in the home country can strengthen women’s desire to stay and work towards achieving greater freedom and a more liberal culture that aligns with their desires and aspirations. Improving the educational system, such as a one percent increase in enrollment in the third middle school, is an important factor in promoting social mobility for women since it provides opportunities for the development of individual talents, higher income, better social status, and improved living conditions, which can encourage women to migrate. Other factors leading to an increase in women’s migration include the decline in economic performance, economic difficulties, and a rise in the misery index in the home country, along with the expectation of a better situation in destination countries.The interactive effect of globalization and entrepreneurial environment on women’s international migration in the selected countries was found to be significantly positive. However, the lack of positive and constructive effects of social, political, and economic globalization on women’s entrepreneurship has moderated the reducing effect of entrepreneurship on international migration. Globalization has actually made it more likely for women entrepreneurs to seek business opportunities abroad, thus increasing their migration.
international trading
Mohammad Matash Yar ahmadi; Minireh Rafat; Seyed Komail Tayebi
Abstract
This paper investigates the factors affecting export diversification in Iran. As deducted from heterogeneous trade theory, the main variables of interest in this paper's baseline specification are entry and trade costs. For this purpose, Theil index is calculated for export diversification. This ...
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This paper investigates the factors affecting export diversification in Iran. As deducted from heterogeneous trade theory, the main variables of interest in this paper's baseline specification are entry and trade costs. For this purpose, Theil index is calculated for export diversification. This index is obtained for ten selected two-digit commodity codes in the HS coordinate system. Then the basic model is introduced and estimated by the generalized least squares (GLS) method. Estimated results show that diversification depends negatively on domestic and foreign market entry costs. Therefore, reducing the unnecessary rules for setting up enterprises, customs regulations, creating transportation and financial facilities can help to improve the Iran's export diversification.
