This thesis has three objectives. First, the thesis evaluates the alternative indirect
methods of measuring or identifying Iran's comparative advantage through revealed
trade performance. Secondly, it seeks to identify Iran's export potential by
considering similar and comparable economies. Thirdly, it explores the potential
volume and direction of fran's trade flows by using a gravity model.
The thesis primarily provides a review and an evaluation of the theory and
empirical robustness of the law of comparative advantage. The application of
indirect methods proves to be useful in identifying Iran's activities of comparative
advantage. Alternative indices of revealed trade performance are used to measure
Iran's revealed comparative advantage (RCA) for non-oil exports. The results based
on these three measurements are found to be consistent, and also show that Iran has
export characteristics which reflect the endowments of this natural-resourceabundant
developing country. Iran's exports tend to lie in natural-resource-intensive
goods, mostly agricultural products, and generally labour-intensive products.
Relatively weak export performance is identified in capital-intensive and humancapital-
Upon determining the commodities in which Iran has a revealed comparative
advantage, the thesis investigates how Iran's export composition may be expected to
evolve in future. Export similarity indices and the revealed export performance of
comparator countries are used to identify the scope for intra- and inter-industry
Finally, a gravity model is estimated in order to compare the actual and
potential volume and direction of Iran's trade. The results show that Iran's current
actual trade is larger than that predicted by the model. The current 'over-trade'
figures arise from fran's oil exports to a few industrial countries. Actual trade with
the developing countries as a whole is by contrast lower than predicted.
A Doctoral Thesis. Submitted in partial fulfillment of the requirements for the award of Doctor of Philosophy of Loughborough University.