The Relationship between Economic Independence and Economic Resilience in Iran

Currently, necessity of four concepts has attracted great attention in development planning. These concepts include sustainable development, human development, learning and "resilience". The philosophy of resilience origins from the increase in the frequency, breadth and depth of exogenous shocks on the national fate. Economic independence is a main target for the economic system of Islam in terms of domestic and external shocks. In this study, an indicator of economic independence for Iran is constructed by a combination of normalized local indices including budget dependence on oil, lack of self-sufficiency in basic food products, consumption dependency on the outside and low non-oil exports during 1989-2014. In order to investigate the impact of economic independence on economic resilience, first, a variable of macroeconomic instability was selected as the representative of macroeconomic vulnerability. Then, an Auto Regressive Distributed Lags (ARDL) model was estimated to determine the link between variables under study. The findings indicate a positive and meaningful relationship between economic independence and resilience of the economy. As a result, one unit increase in economic independence will reduce the macroeconomic vulnerability by 0.32 and 0.13 unit in the short-term and the long-term, respectively. Also, running a variety of Bayesian Auto Regressive Distributed Lags (BARDL) models and calculating error correction term (ECT), show that 1.1 to 2.7 period of time is required to adjust imbalances in the dependent variable and to achieve long-term trend record.