Evaluating of the Hecker-Ohlin-Vanek Theorem in Iranian Economy

Measuring the share of exports and imports of each factor in exports and imports of goods and services according to Heckscher-Ohlin-Vanek theorem is important, and its measurement at the micro level and at the level of economic activities is doubly important to identify the trade patterns of countries. This study examine the validation of the Heckscher-Ohlin-Vanek (HOV) theorem by examining the factor content of trade for six factors: Labor (unskilled, semi-skilled, and skilled), physical capital, research and development, and energy in the Iranian economy. Using the input-output table, the HOV hypothesis was examined by relating the relative abundance and scarcity of factors to the factor content of trade . The validation test was conducted using micro data for 78 activity sectors in agriculture, industry and services using the 2011 and 2016 input-output tables in the Iranian economy. The results show for Iran's economy in 2011 and 2016 that the factor content of trade was negative in 34.61% of activities (27 sectors) and the factors were imported. In 60.25% of the activities (47 sections), it was positive and had a relative surplus of factors, so the factors were exported. In each of the years studied, in 4 subsectors of the services sector, there was no factor trade. In addition, the results show that in 2011 the greatest influence on the production process was from unskilled labor and physical capital, while in 2016 physical capital and spending on research and development predominated.
JEL Classification: F0, F14, F20.