Is Energy Price Increase a Serious Threat to Manufactured Exports of Iran?

According to international trade theories، the main cause of trade is the difference in accessibility and enjoyment of production factors. In fact، countries produce and export the products which they have easy access to abundant production factors. Energy، as a main factor of production، is no exception. Therefore، since Iran enjoys abundant energy resources، it is expected that the majority of its exporting products be energy intensive. Employing the Johansen and Juselius co-integration method، this paper investigates the long run and short run relationship between consumption of energy in industrial sector and the level of industrial export in Iran during 1970- 2007. The research results reveal that، in the long run، there exists، among other things، a strong connection between energy consumption in industrial sector and industrial exports. While in the short run، this variable doesn''t play a significant role in industrial export supply.