Border Effects in Iranian Trade Flow of Commodity Groups: Application of Nonlinear Specification

Generally, transportation costs are one of the important factors on trade flows. This variable is affected by the distance between countries as well as type of traded goods by international transit network. By using a nonlinear gravity model and Poisson-Pseudo maximum likelihood method, this study tries to investigate the effects of these factors as border effects on Iranian trade flows with its 30 major partners during 1992-2014. The results show that except for third group of goods (animal or vegetable fats and oils), import, export and total trade of the other 20 groups of goods have been negatively affected by distance between Iran and its partners and border effects have had an important role in this regard. Twenty-first group (Works of art, collector’s pieces and antiques), first group (live animal and animal products) and seventh group (plastic and rubber) for import flow of goods, first group, tenth group (Pulp of wood or of other fibrous cellulosic material; recovered) and twelfth group (Footwear, headgear, sun umbrellas, walking – sticks, whips, riding - crops) for export flow of goods and finally twenty-first, first and seventh groups for trade flow of goods have respectively been influenced more by distance.