The Impacts of Iran's Joining WTO on Foreign Trade in Agricultural and Industrial Sectors, An Application of RDCGE Model

Document Type : Research Paper

Authors

1 Ph.D in Economics, Semnan University

2 Assistant Professor of Economics, Department of Economics, Imam sadegh University

3 Professor of Econometrics & Social Statistics, Department of Economics, Semnan University

4 Assistant Professor of Economics, Department of Economics, Semnan University, Semnan

Abstract

This paper aims to analyze the long run effects of Iran's tariff reduction in the framework of accession to the WTO on  agricultural and industrial sectors trade, using Recursive Dynamic Computable General Equilibrium (RDCGE) model and Social Accounting Matrix (SAM) of 2011,. According to the results, joining the WTO will lead to a 70 percent jump in the imports of agricultural products.  Then, the process of mild reduction of imports initiates and continues for a decade and stabilizes in the second and third decade following accession. Agricultural exports also grow slowly after a reduction for a decade. Hence, the negative effects of joining the WTO in agricultural sector is mostly appeared in the first decade after accession. In the industrial sector, by contrast, imports and exports jump 21 and 3 percent,  respectively, after which the reduction process starts and continues more sharply and lengthy than agricultural sector. Average estimated long-run growth rates of industrial imports and exports are -3/7 and -3/5 percent, respectively. Although total imports increases in short-run due to tariff reduction, it decreases, in long-run, due to fall in the demand for domestic production, GDP, and household real income. Furthermore, decreases too. low competitiveness of local products will lead to a fall in GDP and total exports

Keywords

References

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new economy and trad
Volume 13, Issue 2
August 2018
Pages 29-51

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History

  • Receive Date: 03 February 2018
  • Revise Date: 17 April 2018
  • Accept Date: 27 May 2018

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