Analysing the effect of industrial clusters on industrial firms export in Iran

Industrial clusters are the geographic concentration of mainly small and medium enterprises (producing, complementary and supporting companies) facing with common challenges and opportunities.One of the main functions of industrial clusters is to provide the conditions required for competitiveness and export promotion of clusters members and stakeholders. Cluster development program in Iran, has been started since one decade ago and needs to be investigated in terms of its effect on the export potential of clusters members. This paper has studied the effects of industrial clusters on export promotion of industrial firms using data gathered from manufacturing establishment (with more than 10 employees) in Iran.
Levin, Lin, Chu Test and Im, Pesaran, Shin Test was used to test the stationarity of variables. In order to test the existence of co-integration relationship between variables, Kao and Pedroni tests were applied. Generalized method of moment is used to estimate the dynamic panel regression. For this purpose, the dynamic and static functions of industrial export supply have been estimated considering industrial clusters as one of the independent variables included in the functions. The null hypothesis that the over-identifying restrictions are valid was tested by Sargan statistic. Arellano and Bond test was used to test the serial correlation. Required data was gathered from Iran manufacturing establishment (with more than 10 employees) during the period 2001-2012.
Discussion and theoretical and empirical background of industrial clusters studies strongly support the effective role of industrial cluster in competitiveness and export performance um enterprises. The findings of both estimated dynamic and static industrial export supply functions in this paper reveal that industrial cluster and firms agglomeration in form of cluster, has a positive and statistically significant effects on industrial firms export. According to the estimated dynamic industrial export supply function, the elasticity of export supply with respect to industrial clusters was estimated around 0.6 which means that one percent increase in the situation of industrial clusters can leads to 0.6 percent increase in industrial export. Based on the estimated static industrial export supply function, however, the elasticity of export supply with respect to industrial clusters was estimated around 0.02 which is statistically significant and shows that one percent increase in the situation of industrial clusters can leads to 0.02 percent increase in industrial export. These findings are compatible with the theoretical expectations regarding the relationship between clustering and export.
Industrial export is also positively influenced by industrial firm’s production and exchange rate and is negatively affected by manufacturing export price index. According to the estimated coefficients of variables included in the dynamic and static industrial export supply functions, exchange rate has the strongest positive effect- compared with other variables- on export of industrial clusters. In other words, one percent increase in the exchange rate can leads to 2.6 percent increase in industrial cluster export. This reveals that the elasticity of industrial cluster export with respect to exchange rate is greater than one. Provincial GDP is another variable which positively affects the level of industrial cluster exports so that one percent increase in gross domestic production leads to 0.7 percent increase in industrial cluster export located in different provinces in Iran. Export price index, however, has a negative and significant effect on industrial cluster export. This result is compatible with the theoretical expectations. The elasticity of industrial cluster export with respect to export price index is 0.3 which is less than one. It is inferred, therefore, that increasing in the price of export products of clusters did not reduce the export total revenue gained from industrial clusters.