Document Type : Research Paper

Authors

• Marjan Kordbacheh ¹
• Ali Aghar Banouei ²
• esfandiar Jahangard ³
• Javid Bahrami ⁴

¹ Ph.D. Candidate in Economics, Allameh Tabataba’i University

² Professor, Economic Planning and Development Dept., Faculty of Economics, Allameh Tabataba’i University, Tehran, Iran

³ Associate Professor, Economics Dept., Faculty of Economics, Allameh Tabataba’i University, Tehran, Iran

⁴ Associate Professor, Business Economics Dept., Faculty of Economics, Allameh Tabataba'i University, Tehran, Iran.

Abstract

The trade pattern of Iran's economy is asymmetric and relies on upstream industries. Converting this type of pattern into value added and analyzing it at the macro and sectoral level provides a basis for analyzing the position of Iran's economy in Global Value Chains. In this regard, two issues are highlighted: first, underestimating or overestimating in GDP measures resulting from the conversion of gross trade into value-added terms through the construction of a Trade in Value Added (TiVA) satellite account. The second is the assessment of Iran's participation in global value chains. In order to quantitatively investigate these two issues, Eora Multi-Region Input-Output database (for1990 and 2017) and the Extended Hypothetical Extraction Method have been used in the framework of the comparative static model. The findings show that the TiVA satellite account is fully consistent with the System of National Accounts and therefore the GDP of each country. Second, From the country perspective, the shares of value-added exports (VAX) and returned domestic value added (REF) embodied in Iran’s gross exports exceed the global average, indicating relatively strong upstream participation in GVCs. In contrast, the shares of foreign value added (FVA) and double-counting (D-C) remain below the global average, reflecting weak integration into GVCs. From the bilateral perspective, the results suggest that Iran’s membership in BRICS and the Shanghai Cooperation Organization (SCO) has the potential to enhance the country’s participation in GVCs.

Keywords

• Global Value Chains
• Gross Exports
• TiVA Satellite Account
• Extended Hypothetical Extraction Method
• World Input-Output Tables

Main Subjects

• International economy