An Analysis of the Impact of Free Trade Relations of the I.R. of Iran with Moslem Countries

The article deals with the advantages gained through the implementation of free trade policies following regional treaties. It intends to examine the role of this in the foreign trade relations of Iran with its major trade partners among Moslem countries. The model used here is the gravity model which enables the estimation of the impacts on mutual trade while utilizing the influential factors like the economic structure specifications of involved countries (i.e GNP and per capita GNP, geographical distance, population, and trade facilitating indexes within an econometric model). Panel data is also used for the assessment of the model.The results show that free trade relations has had a meaningful and positive impact on the I.R. of Iran and its 16 Moslem partners’ foreign trade. In addition, other measures like the formation of regional treaties that aim at furthering free trade relations, decreasing and ultimately removing customs tariff would contribute greatly to the growth of foreign trade of member countries.