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

Shahmoradi, Behrooz

doi:10.48308/jem.2025.238369.1971

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

Behrooz Shahmoradi

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

10.48308/jem.2025.238369.1971

Abstract

For decades, researchers in the field of economic development have suggested that countries are likely to export new products that are align with the existing productive capabilities frontier 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, 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 frontier of Iran's productive capabilities (14 product codes). Iran, on the other hand, can invest in more than 50 product codes with competitive strength (RCA>1) 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 results also have 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.

Keywords

Main Subjects

International Economics

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