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The impact of the Eurasian Economic Union–Iran preferential trade agreement on mutual trade at aggregate and sectoral levels

Author

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  • Amat Adarov

    (The Vienna Institute for International Economic Studies-Wiiw)

  • Mahdi Ghodsi

    (The Vienna Institute for International Economic Studies-Wiiw
    Vienna University of Economics and Business (WU))

Abstract

In October 2019, the preferential trade agreement between the Eurasian Economic Union (EAEU) and Iran entered into force. In the present study, we estimated its expected impact on mutual trade flows at aggregate and sectoral levels using the gravity model of trade based on the global sample of bilateral trade flows at the harmonized system six-digit level. The analysis suggested that the implementation of the agreement will boost mutual trade for both trading partners, with relatively greater gains expected for the EAEU’s exports to Iran. The total gains in mutual trade were estimated to reach over USD 72 million, with exports from the EAEU to Iran anticipated to increase by 19.1%, compared with a rise in exports from Iran to the EAEU of up to 7%. The difference in the impact is highly heterogeneous across the five EAEU countries and across sectors. The major export gains are estimated to accrue in the agri-food sectors—especially, trade in miscellaneous fruits and vegetables—and in the chemicals, textile, polymer production and selected electrical and machinery manufacturing sectors.

Suggested Citation

  • Amat Adarov & Mahdi Ghodsi, 2021. "The impact of the Eurasian Economic Union–Iran preferential trade agreement on mutual trade at aggregate and sectoral levels," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 11(1), pages 125-157, March.
    • Handle: RePEc:spr:eurase:v:11:y:2021:i:1:d:10.1007_s40822-020-00161-2
    DOI: 10.1007/s40822-020-00161-2
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    Cited by:

    1. Sanjeev Vasudevan & M. Suresh Babu, 2021. "Global production sharing and trade effects: an analysis of Eurasian Economic Union," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 11(4), pages 633-665, December.
    2. Andrzej Cieślik & Oleg Gurshev, 2022. "Friends with or without benefits? An empirical evaluation of bilateral trade and economic integration between some of the post-Soviet economies," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 12(4), pages 769-795, December.

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    More about this item

    Keywords

    EAEU; Iran; Trade agreement; Gravity model; Poisson pseudo-maximum likelihood;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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