A New Approach to Examining the Possibility of Bilateral Interactions Between Countries Based on Productive Capacities: A Case Study of Iran and China

Document Type : Original Article

Author

Department of Science, Technology and Innovation Financing and Economics, National Research Institute for Science Policy (NRISP), Tehran, Iran.

Abstract

For decades, researchers in the field of development economics have suggested that countries are likely to export new products that align with the existing productive capabilities of those countries or their neighbors. While there is consensus on this perspective, there is a lack of a clear understanding of an approach that can create an optimal balance between the development of related and unrelated productive capabilities. In this context, the present paper attempts to examine the possibility of bilateral economic interactions between Iran and China as a case study, using the approach of economic complexity as a new methodology. The findings indicate that, given its current capabilities, China has the potential to invest in over 28% of the products at the border of Iran's productive capabilities (14 product codes). Iran, on the other hand, can invest in more than 50 product codes with competitive strength in the Chinese economy. From a categorization perspective, Iran has a better chance of investing in China's economy within the subset of chemical products, metals, and mining. Similarly, China can engage in the Iranian economy within the subset of machinery, chemicals, and metals. The paper also proposes recommendations for policymakers and decision-makers in this area, including the application of this approach to international interactions, whether bilateral or multilateral, in the fields of science or technology.

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Journal of Economics and Modelling
Volume 15, Issue 3 - Serial Number 59
December 2024
Pages 101-130

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