Foreign direct investment and Iran's bilateral intra-industry trade with China and the Russia Dehghani Alia, Saadat Rahmanb, Sadeghi Maryamc aAssociate Professor of University of Shahrood, Iran bAssistant Professor of Semnan University, Iran cPhD student of Semnan University, Iran Online published on 9 October, 2015. Abstract This paper analyzes the dynamic changes of Iran's intra-industry trade with its major trading partners, China and the Russia, from 2001 to 2013. The estimated intra-industry indexes demonstrate that, while shares of Iran's intra-industry trade with both China and Russia rose substantially, its intra-industry trade with China increased of the overall trade in 2013, considerably larger than 15% with the Russia. The Iran-China intra-industry trade concentrated in electrical and machinery sectors and accounted for 52 and 55% of the total trade in those sectors, respectively.. In addition, the paper investigates to what extent that foreign direct investment from those two countries promoted their bilateral intra-industry trade with Iran. The empirical results show that, China direct investment performed a significant role in enhancing the bilateral intra-industry trade. However, it finds evidence that the Russia direct investment contributed to the growth of the Iran-Russia intra-industry trade. Top Keywords FDI, Intra-industry trade, Technological differences, Trade patterns, Iran. Top |