Assessing the Role of Institutional Quality of Iran and its Trade Partners on Iran’s Agricultural Products Exports

Nowadays, institutions and institutional quality of countries have become one of the most important issues in the international trade literature which based on the empirical findings of various studies have been considered as one of the main trade barriers in countries and have led to a change in the country's trade model. Therefore, the purpose of this article is evaluation of the effect of Iran’s institutional quality and her major trading partners on Iranian agricultural products exports. To achieve this goal, Iran's agricultural exports to 45 major trading partners’ data were analyzed using the gravity model over the period of 2002-2014. The results showed variables of trade partners GDP, trade agreements and common border have had positive and significant effects and distance and economic similarity have had negative and significant effect on Iranian agricultural exports. Also, the institutional quality of Iran and her trading partners have had negative and positive effects on agricultural exports of Iran, respectively. In other words, the low institutional quality of Iran has been recognized as one of the barriers of Iran’s agricultural exports. Therefore, since improving the quality of domestic institutions through reducing risk and transaction costs can play a decisive role in increasing agricultural exports, it is suggested that more investment be made in improving the domestic institutions infrastructures in order to be benefited by the global trade environment.