Investigating the Effect of Structural Changes and Trade Liberalization on Total Factor Productivity in Iran (1991-2018)

Yasaman Hokmollahi (), Ali Taiebnia () and Ali Souri ()
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Yasaman Hokmollahi : Faculty of Economics - Alborz Campus, University of Tehran Tehran, Iran
Ali Taiebnia: Faculty of Economics, University of Tehran, Tehran, Iran
Ali Souri : Faculty of Economics, University of Tehran, Tehran, Iran

Journal of Money and Economy, 2021, vol. 16, issue 1, 71-92

Abstract: Structural change plays an important role in developing any economy, so understanding it is critical to make policies that increase total factor productivity. The structural change that leads to an efficient resource allocation after trade reforms is desirable; the key factor that can affect the relation of "structural change and trade liberalization" with productivity is the quality of institutions. In this study, we first use the principal component method to propose a multidimensional index for structural change and then apply the ARDL econometrics model to evaluate the effect of trade liberalization and structural changes on total factor productivity in Iran during 1991- 2018. The results show that structural changes increase the total factor productivity, and trade liberalization has a positive and significant effect on total factor productivity in the short term. Our results also indicate that there is no long-run relationship in this period.

Keywords: Structural change; Trade liberalization; Institutions; Productivity (search for similar items in EconPapers)
JEL-codes: C5 F16 R2 (search for similar items in EconPapers)
Date: 2021
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