Structural Factors Affecting International Trade Growth in Iran
Farsi JY, Moradi MA, Jandoust A, Esfandabadi HM
2016
Business and Economics Journal
Introduction Establishing nascent new ventures and stabilizing their commercial activities are among the primary objectives of the governments in achieving sustainable development and social welfare growth. The nourishment of international trade and the facilitation of the related activities can aid the infiltration of additional products into foreign markets and hence the survival of new nascent ventures. Since most of the foreign markets are highly competitive and international trade change
more »
... d growth is dependent upon changing the conditions in the short run, the role played by structural factors is fundamental in controlling and facilitating the different dimensions of commercial activities and mitigating the effect of the gap between growth strategies [1, 2] . While a range of structural factors are aimed at the way processes take place in specific contexts, the identification and application of these factors to growth strategies, as well as the consideration of the interactions among the three dimensions of context, content and process in the overall business environment is regarded as fundamental to governments [3] . The classification of structural dimensions of context, content and process, and the identification of crucial factors in each of the dimensions determines the responsibilities of government decisionmakers and sorts out the factors for the top managers in order of priority. Therefore, the major factors affecting the growth of foreign trade are collected from the literature and interviews with experts and categorized into three dimensions. Afterwards, according to the comments made by 40 active commercial institutions, the common mental patterns for 32 factors affecting foreign trade were analyzed using the Q-method. Finally, 9 effective structural factors in the overall environment of international trade in Iran were identified. Literature Review The identification of factors affecting business performance requires a careful study of social and commercial structures. To identify the driving factors and promote growth, the structural factors need to be examined and studied in different market environments [4] . Growth strategies depend on structural factors like government policies with permanent effects. Therefore, structural factors have sustainable and immediate effects on domestic and international interactions of organizations and commercial enterprises. These factors include supportive policies, tax cuts and infrastructural development policies administered by governments for commercial development and social growth. In "Managing Change for Competitive Success" Pettigrew [3] argues that the content, context and process dimensions are the main factors affecting growth ( Figure 1 ). Content (intentions, objective and goals): What? Context (domestic and foreign environment): Where? Process (function and application): How? Successful changes in this approach are accomplished through Abstract Assuming that the future of the country is affected by the activities of nascent ventures today and considering that the establishment of such ventures is one of the aims of governments to improve and ensure a growing economy, it would seem a helpful resolution to encourage infiltration into foreign markets which would result in the prosperity of nascent ventures. Therefore, 32 structural factors affecting the growth of foreign trade were extracted from the related literature and classified according to the context, content and process dimensions. The mental patterns of 40 active exporters were analyzed using the Q-method and the important factors affecting foreign trade were extracted from their mental patterns. The research findings indicate that 9 major factors (international regulations, international policies, developing international infrastructures, developing the infrastructures of the country, service and support, exchange policies; domestic rules and regulations, trends and management) correspond to the three major dimensions. Achieved through reviewing the latest literature, the results can help government policy-makers with decision-making and prioritizing policies for each respective dimension. Figure 1: Understanding Strategic Change: three essential dimensions. Figure 1: Understanding Strategic Change: three essential dimensions. emphasizing the interaction between the three dimensions and the way tasks are done in domestic and foreign environments. Therefore, change and growth processes are understood through considering (domestic and foreign) context, content (objectives and assumptions), and process (executive patterns). When it comes to crucial decisions, the most important factor will determine the result of the decisions. Empirical evidences Factors: This section deals with the literature related to the factors affecting international trade growth in Iran. Using the SWOT method, a study is conducted to the end of designing a strategic plan for nonoil export development by Trade Promotion Organization of Iran. For data collection, the research used the interview data with non-oil experts conducted in 2006 from the Trade Promotion Organization of Iran on the factors affecting non-oil exports. According to the experts, opportunities, threats, weaknesses and strengths were identified, the main factors of which are shown in Table 1 (Trade Promotion Organization of Iran, 2007) (Table 1). In another study, Do'ayi et al. used the Delphi method to investigate the factors affecting international trade. They interviewed 25 experts in non-oil exports selected through non-random-snowball sampling. Their findings revealed that factors such as standardizing business activities, processes and products, developing and advancing IT and stability and national security play a key role in non-oil export growth. In their study, Fathi and Azizi [5] classified 35 major barriers to political, economic, commercial and inter-organizational development. They prepared and distributed a questionnaire among 500 firms in various industries. Afterwards, the analysis of the collected data from 335 returned questionnaires, point to the importance of low economic security in Iran, low foreign investment, proper management of information systems all over the country and the activities of business, unions, and commerce chambers. They suggest that management functions and systems, business, union and commerce chambers as well as banking systems, the custom organization need to be improved and problems related to financing need to be solved. In another study, Madhooshi [6] argues that factors such as export institutions, lack of knowledge about the laws and regulations of the target country, conflicting export instructions, provincial research centers, seasonal fees, exchange rates, taking foreign agencies are among the major factors in international trade growth in Iran. The major factors affecting businesses in different economic environments which are pointed to in other studies around the globe include: the necessary documents, information about foreign markets, barriers created by governments, foreign competitors [7], the required documents for export, cultural differences, barriers created by governments, competition, exchange rates, taking foreign agencies [8]; high dollar rates, transportation expenses, focusing on foreign markets, government and legal barriers [8] (Baursmichmidt, 1985); government fees, commitment to high quality products and services [9], intense foreign competitions, government support, attractive export and government incentives [10], barriers created by governments, government policies, fees and supports, firm size, experience and network support [9], various standards for products, laws and regulations, government support, exchange rates, taking foreign agencies, political-economic fluctuations, legal and administrative corruption [11] , exchange rates, transportation expenses, foreign competitors [12] , exchange fluctuations, government support, competitive foreign markets, pricing policies [13] , government support, foreign competitors, import tariffs, pricing policies, complex regulations, high exchange rates, government subsidies P [14] and so forth. Some of the above mentioned factors are export drivers and some other factors act as barriers to export growth. The present research aims at identifying the role played by these factors in the context of Iran. The identification of factors affecting export growth in economic environments of other countries could help the identification of opportunities and threats in the way to the path of development. After the modification and localization of these factors, the effect of each factor in mid and long term could be determined (Table 2 ). Laws and regulations The most significant incentives provided by governments for international trade development include: granting subsides to R&D, supervising importations, trade contracts, granting preferential credits and guaranteeing exportations [15] ; removing taxes, determining taxes based on each region, postponing tax liabilities [16] ; exchange rate stabilization, actual export subsides [17] and removing/facilitating tax payment, income tax on exports, custom fees, importing machineries and equipment for manufacturing export products, subsidy adjustments based on export rates, actual income rates, interest rates, and tax documentations [18] .
doi:10.4172/2151-6219.1000235
fatcat:jug2l7bqofdc7eyshnvl4gycqm