Iranian Economic Review
Volume:10 Issue: 13, Spring 2005

During recent years, regional economic integration has played a crucial role in the conduction of trade policies. Economic integration relies upon the concept of joint commercial policies within regions by which countries enable to promote their trade potentials. Basically, a new type of cooperation throughout new preferential trade agreements has emerged by economic blocks such as MERCOSUR, NAFTA, ASEAN and others. Now, there is an appropriate avenue for the nations of Euro-Mediterranean to deepen their economic relations and benefit from regional integration effects.The present paper makes attempt to indicate the impact of possible economic integration on the international trade flows of the Euro-Mediterranean countries. Accordingly, it uses a trade gravity model in order to explore main determinants that would significantly affect the trade flows of mentioned countries. To the end, an application of spatial econometric methods can assist us in obtaining relevant estimation results.The contiguity effect must be considered because of spatial dependence of the Euro-Mediterranean countries. These countries have some common borders and they therefore have impacts on each other and their relations can be influenced by neighborhood. Thus estimating the model through traditional econometrics obtains biased results and the model must be solved by spatial techniques. The paper thus tries to answer the question of to what extent the contiguity factor can influence the intra-trade flows of the Euro-Mediterranean countries.

The present article studies and analyses plan and planning in Iran with respect to parameters of the idea of formation, birth, objectives, strategy and its functioning. Iran has half-a-century record of planning, and has implemented 7 constructional and developmental plans so far (5 plans before and 2 plans after the Revolution). Right now, Iran is implementing her third developmental plan. Two 7-year first and second plans have not been implemented comprehensively without any objective of quantitative development, but only in the form of a complex projects upon the framework of indices of resource allocation. Before the Revolution the Third, Fourth and Fifth Plans were achieved with an average annual growth of 8.5, 13.1 and 16.3 per cent in gross national product. Following the Revolution, Iran had no planning for 11 years (1978-1989). The First Developmental Plan (1989-1993) which had been prepared and implemented with the objective of reconstruction, water, electricity, gas and service sectors had a considerable growth but the rest of the sectors did not achieve the pre-determined objectives. The Second Developmental Plan was prepared and implemented with the objective of social justice and increase in productivity. The results were a significant growth in building sector but other sectors did not achieve their respective objectives. On one side, regional planning and development appeared from the Second Development Plan onwards in Iran before 1979 and special attention has been paid to the regional development plan in the two plans of the post-revolution. Iranian Development plans before and after the revolution was dependent on oil incomes and couldn’t afford to balance national income among the ten groups of the population.

Extensive government control over industrial and service sectors show it could not overcome the increasing misuse of public resources, raising debts, lack of improvement in operation efficiency and mismanagement. Numerous productivity programs could be a key to improve performances.In present article a case of productivity program in one of State Owned Enterprises (SOEs) namely Isfahan Steel Mill Company (ISMC) was identified, then conditions and factors that enhanced its performance through a productivity plan was studied. Then productivity plan consisting of external and internal environment, productivity program, and its performance was looked into. In order to gather information the author relied on secondary data sources and interviews with key Human Resource Management personnel in ISMC.The result showed Human Resource Balancing Plan in productivity program at ISMC was affected positively by government as an external factor and also the program was affected positively by newly wage and salary systems. During a period of 7 years 18,207 employees optionally left the ISMC decreasing employees from 31,684 to 13,477 and production rose from 600,000 tons annually to 1.9 million tons per year.At the end with an analysis based on Yu's internal and Daft external factors a number of strategies are recommended for enhancing Public Sector Undertakings (PSUs) productivity.

In this paper various ARCH models and relevant news impact curves including a partially nonparametric (PNP) one are compared and estimated with daily Iran stock return data. Diagnostic tests imply the asymmetry of the volatility response to news. The EGARCH model, which passes all the tests and appears relatively matching with the asymmetry in the data, seems to be the most adequate characterization of the underlying data generating process. The PNP model successfully reveals the shape of the news impact curve and is a useful approach to modeling conditional heteroskedasticity.

Early trade liberalization in the East Asian newly industrialized economies took place against a backdrop of rapid growth. Later, following the instability of the international economy in the late 1970s/early 1980s, several developing countries adopted major economic reforms including trade liberalization somehow in the form of preferential trade agreements. Increasing openness and mutual trade relations are likely to be associated, not only with increasingly competitive product markets but also with intra industry trade (IIT), that is, the simultaneous exports and imports of products within the same industry. Intra industry specialization has attracted considerable attention in recent years, and an increasing number of researchers have developed econometric models to explain intra industry trade. This paper has two objectives. First it strives to calculate the extent of bilateral intra industry trade of Iran and Malaysia, using Grubel & Lloyd index at the 6-digit level of harmonized tariff schedule over the years 1997-2001. Secondly, some of the various sources of intra industry trade are combined in a panel gravity method to explore the impact of implementing any PTA between two countries on the bilateral Iran-Malaysia trade relations. The results of our econometric study support the hypotheses put forward in literature as far as the common characteristics of the countries in question are concerned. Thus, the regression coefficients of the average gross national income, Linder variable, average country size, inequality in country size, distance, and preferential trade agreement all have the expected sign and are statistically significant in 10 percent level in the fixed effect model. The findings support our hypothesis, showing that preferential trade agreement plays a significant role in the rapid increase of IIT between the two countries.

One of the methods for studying the relation between economic growth and international trade is considering the effects of tariff on economic growth. The neo-classical economists believe that free trade not only has significant benefits for every country but for all in the world, therefore, they are seeking for laterally and multi-conceptual omission of trade restrictions and advise on the countries with taking into consideration of specialization to do their best in production and international division of labor with little interferences of government in international trade. In this paper and in order to show the effects of tariffs on economic growth, at first we maximize the household utility function in a neo-classical model. The period of our study is from 1961 up to 1998 lunar. The effects of tariff on economic growth have been considered in two different scenarios. In the first scenario, we assume that exogenous technological progress rate is equal to 2% and depreciation exchange rate is equal to 10%. In the second scenario, the exogenous technological progress rate is 2% and depreciation rate is 5%. The results of both confirm that any trade restrictions may result to a reduction in economic growth rate. In this manner, the effect of tariff rate on economic growth in post- revolution period in comparison with pre-revolution one has decreased due to the result of reduction in degree of openness and reduction of population growth rate. On the other hand, any lower depreciation rate may have a negative effect on economic growth.

In recent years, it has become increasingly important to incorporate explicit dynamics in economic analysis.These two tools that mathematicians have developed, differential equations and optimal control theory, are probably the most basic for economists to analyze dynamic problems.In this paper I will consider the linear differential equations on the plane (phase diagram) and elements of nonlinear systems, when we have unequal real roots of the same signs and opposite signs of characteristic roots, and the applications of the theory of differential equations to certain macroeconomic problems. The basic tools for discussion are phase diagram techniques.

Although studies on the relation between size and efficiency are ample, studies on the relation between size, fragmentation, and efficiency are limited. It is the purpose of this study in which a single-stage stochastic parametric approach is used. For this purpose production of wheat in Iran is a good case because wheat is the core commodity of the Iranian agricultural system which is dominated by small and fragmented family farms. The data comes from a survey of wheat producers in West Azarbayjan province, a major agricultural region, located in the north-west of Iran, in which around 50 percent of the lands under annual crops is allocated to wheat, almost the same proportion as in the whole country. Mean size of farmland in the sample was 2.2 hectares (10,000 meters) ranging from 0.3 to 12 hectares; mean number of plots of land was 1.7 ranging from 1 to 7 plots. It was found that mean technical efficiency was 63.4 percent ranging from 11.6 to 95.1 percent. Significant inverse relation between total costs of inputs, as index of size, and positive relation between number of plots of land, as index of fragmentation, and technical inefficiency were found.

Budget deficit constitutes a major fiscal indicator. It has major important ramification on macro-economic position of all nations. In developing countries generally, and in Iran specifically, governments are likely to spend more on miscellaneous as well as differentiated obligations causing high expenditure costs with respect to their limited revenues. This causes a budget deficit to incur. The Iranian officials traditionally have regarded the oil revenue as an income item in budget statement and, generally, use a fraction of this revenue as current expenditure. Looking into this issue, the article analyzes the government’s inter-temporal budget with some adjustment and interpretation. The empirical findings suggest that the country has not been in a sustainable path during the sample period. This article arrives at the conclusion that the Iranian fiscal stance with respect to the future generations is non-stationary and that the fiscal authorities would not be able to repay the incurred debts to the future generations and that the central government is in fact vulnerable, viz., involved with insolvency conditions.

In this paper we first describe the stochastic optimal control algorithm called ((OPTCON)). The algorithm minimizes an intertemporal objective loss function subject to a nonlinear dynamic system in order to achieve optimal value of control (or instrument) variables. Second as an application, we implemented the algorithm by the statistical programming system ((GAUSS)) to determine the optimal fiscal policy for Iran during the third development plan (1383 – 1379). The obtained results show that under optimal fiscal policies, the rate of economic growth and current account balance proposed in the third development plan will be achieved. Based of the findings having found compatible results therefore the determination of optimal macroeconomic policies for the Iran’s forth development plan is suggested.