Abstract:
This paper aims to identify key challenges facing Iran and South Korea in their bilateral trade and investment relations. In particular, it is concerned with the policy implications which can be useful for policy makers and business people of both countries. For this purpose, we review and analyze the recent developments of the Iranian economy and bilateral trade and investment relations between Iran and Korea as well. Then, we discuss how the impact of the recent economic sanction imposed on Iran has affected the economy and the economic relations between Iran and Korea. Finally, this paper identifies the pattern of revealed comparative advantage (RCA) at the 2 digit sector level of the Harmonized System of classification. The analysis shows no similarities in the structure of comparative advantage for Iran and Korea. After identifying some key challenges, we discuss how both sides can overcome the obstacles to boost the mutually beneficial trade and investment.
Machine summary:
"Tan he remaining of the paper includes a history of economic relations between Iran and Korea (Section 2), Effect of sanctions (Section 3), IIT measurements (Section 4), measurement of the RCA (Section 5), A Comparison between RCA and IIT in both countries (Section 6), investment potentials for more collaboration (Section 7) and conclusion (Section 8).
However, Korea has been more connected with trade world and advanced in some of the specific sectors, such as automobile industry, information and communication, electronic devices etc (IMF, 2012) / Figure 1: Korea's Rank on Trade with Iran (2001-2012) Source: Compiled from official statistics of the Tehran Chamber of Commerce (www.
After use of Grubel and Lloyd (GL) index at the 2-digit from the Harmonized System (HS), It could be found that Iran and Korea had the maximum levels of trade overlap, on average, in products coded by H2-29 (Organic chemicals) and H2-57 (Carpets and other textile floor coverings), while they had minimum values of IIT, on average, in products coded by H2-12 (Oil seeds and oleaginous fruits), H2-26 (Ores, slag and ash) and H2-30 (Pharmaceutical products)respectively.
Iran is more advantageously placed than Korea in the world market in carpets and other textile floor coverings, mineral fuels, edible fruit and nuts, vegetable plaiting materials, salt, sulfur, earths and stone and Korea is more advantageously placed than Iran in ships, boats and floating structures, knitted or crocheted fabrics, man-made filaments, optical, photographic, cinematographic, Iron and steel, electrical machinery and equipment and parts thereof, impregnated and coated."