Analyzing the Factors Affecting Iran Services Sector Intra-industry Trade with Regional Blocks

In this paper we revisited the recent study examines the determinants of Intra-Industry Trade (IIT) in the agriculture, industry and services sectors between Iran and European Union, ECO, GCC and ASEAN countries in the period 1980-2009, using a dynamic panel data. This study uses country-specific characteristics as explanatory variables. The results indicate that IIT is a negative function of the difference in GDP per capita between Iran and trade partners. There is also a statistically significant relationship between IIT and the countries demand similarities. Results also reveal the importance of the size of economy and product diversification in intra industry trades. Finally the hypothesis that trade increases by a decrease in transportation costs can’t be rejected.