The Affectability of Industrial Trade in Iran's Relations with High Middle-Income Countries: The Technological Gap and Learning Process Channels

The main purpose of this article was to measure the effectiveness of industrial trade with an emphasis on the technology gap and the intensity of learning in Iran and high-middle-income countries. To meet these ends, the industrial trade using Grubel-Lioyed criteria for 97 countries over 2002-2021 at four-digit HS codes was calculated. Moreover, this study sought to investigate the specific effects of industry and country on industrial trade in the framework of Tobit Heckman's two-stage model, the databases, and statistical information extracted from the World Bank and the International Trade and Development Organization. The results of the study, while confirming the predominance of inter-industry trade compared to intra-industry trade of Iran with partners, indicate the effect of most variables with the expected sign on industrial trade. Among the indicators of technological achievements, only the human skill gap index has a negative effect on industrial trade while the rest of the technical indicators such as technology diffusion and creation showed a positive and significant effect. The results of the learning intensity also provide evidence of Iran's growing experience in producing domestic products similar to foreign ones at a lower cost and acquiring the knowledge of installing and assembling imported capital goods. In addition, the lack’s effects of foreign investment on intra-industry trade between Iran and its partners can be attributed to barriers to entry, such as the tightening of economic sanctions against Iran