The Impact of the Free Trade Agreement (FTA) between Iran and Turkey on the Expansion of Non-Oil Export and the Import of Capital and Intermediate Goods to Iran

Abstract

This article studies the effects of the Free Trade Agreement (FTA) between Iran and Turkey on the expansion of non-oil export and import of capital and intermediate goods to Iran. For this purpose, the SMART model is employed to determine the trade creation and diversion effects of the agreement. The results demonstrate that the volume of trade and export of Iran would increase after the elimination of tariff barriers between Iran and Turkey. Although, due to the increase of imports over export the trade balance of the country becomes negative, but the large part of the increase relates to the import of capital and intermediate goods

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