Assessing the Effective Factors on Agricultural Intra Industry Trade between Iran and Asian Trading Partners

Abstract Intra industry trade compared to inter industry trade imposes lower cost on economic, so identifying the effective factors is important. Since Iran's Agricultural sector has high potential in production and trade, the aim of this paper is identifying the determinants on agricultural intra industry trade between Iran and Asian partners as well as assessing the factors in ECO (including Iran) and ASEAN (without Iran) trade agreements over the period of 2001-2014. For these purposes, gravity model is used. The results indicated that difference in per capita GDP (income), difference in agricultural land, and RTA have positive and significant, while distance and border have negative and significant effect on agricultural intra industry trade between Iran and Asian partners. Based on the results, difference in per capita GDP (income), economic difference and common border are the factors reducing intra industry trade of Iran with ECO, while differences in per capita GDP (income) and difference in agricultural land have an increasing impact on intra industry trade in the agricultural sector of Iran with ASEAN countries. So, it is suggested that appropriate policies such as membership in larger trade agreement implement in order to strength Iran's agricultural intra industry trade.