The Nexus Between International Trade and Sustainable Economic Growth in Iran: An ARDL Modeling Approach

This article analyzes the nexus between international trade and Sustainable Economic Growth (SEG) in Iran, as an oil-dependent developing country, by estimating both the Long and short-run relationships, the Vector Error Correction Model (VECM), the speed of adjustment to equilibrium in response to shocks, and the causality relationship among economic growth and international trade. The paper also provides some analytical insights into Iran`s international trade trend. According to the results, it seems that export expansion would contribute to GDP growth through positive economic externalities. Simultaneously, GDP could have a prominent role in the import expansion, leading to further international trade through enabling domestic industries and facilitating technological advancements and boosting industries which in turn promote SEG. This mechanism would provide a solid ground to recommend policymakers to encourage and facilitate Iranian industries to transfer towards export-led manufacturing and promote an international entrepreneurship environment.