The Effect of Political Institutions on Iran’s Exports to West Asian Countries: Spatial Econometric Approach

As the driving force behind economic growth in the world markets, export is the most significant objective of foreign trade policy. One of the requirements for expanding foreign trade is to examine modern models of international trade to identify the economic and political issues affecting the countries’ trade. For boosting economic growth, the majority of countries seek to expand trade with other countries, producing goods and commodities based on relative advantages. Various factors may affect the values of Iran’s exports to other countries, among which the leading institutional indicators, which are capable of providing suitable conditions for expanding the export markets of Iran, seem to be highly significant. In the present paper, the effect of political institutions on Iran's exports to West Asian countries during the period 2000-2015 is investigated and empirically analyzed by mixed regressive-spatial autoregressive model. The research employs a regression model with panel data based on different commodity groups in the six-digit codes of Iranian trade with West Asian countries. As the research findings show, the governance index, representing the political institutions, has positive and significant effects on exports and significantly affects Iran's exports.