Factors Affecting Diversification of Industrial Exports in Iran

Non-oil export growth is considered as an effective way to achieve economic growth due to the instability of oil revenues in countries with oil reserves. In this regard, the necessity of studying the factors influencing export diversification is also highlighted as the adoption of business policies. Considering the emphasis of the country's development plans on the growth of non-oil exports, diversification of exports is one of the suitable policies in this regard. The purpose of this study was to evaluate the role of the specific and definite factors of Iran in determining the process of export diversification. To this end, we used the Herfindahl-Hirschman Index for nine commodity groups to determine the export variability, using the Kalman filter method and time series data for the period 1978-2012. The above study suggests a positive and significant relationship between foreign direct investment, domestic investment, competitiveness index, financial sector development and institutional strength, and the growth of the exchange rate with the diversification of exports in this country. These findings have important policy implications for developing future plans. Therefore, it is recommended that Iran consider private sector credit in future development plans and improve its international competitive ability to attract foreign and domestic investors.