The Gravity Model of Iran's Foreign Trade Efficiency With MENA Countries

Document Type : Original Article

Authors

1 M.A in Economics, Faculty of Economics and Administrative Sciences, University of Mazandaran, Babolsar, Iran

2 Ph.D. in Accounting, Department of Accounting, Faculty of Economics and Administrative Sciences, University of Mazandaran, Iran

3 Associate Professor, Department of Energy Economics, Faculty of Economic and Administrative Sciences, Mazandaran of University, Babolsar, Iran

Abstract

This study examines the efficiency of Iran’s foreign trade with MENA countries using a gravity model within a stochastic frontier framework over the period 2010–2022. The findings indicate that Iran tends to trade more with wealthier and larger economies, particularly Iraq, Kuwait, Syria, and the United Arab Emirates. In contrast, geographical distance negatively affects trade flows, as longer distances increase transportation costs and logistical constraints. Gulf countries, including Kuwait, the UAE, and Oman, maintain higher trade volumes with Iran, demonstrating that proximity facilitates both transportation and stronger economic linkages. Iran also exhibits higher trade efficiency with neighboring countries sharing land borders, whereas it has been less successful in leveraging maritime access to expand trade with other MENA partners. The results further highlight that domestic inefficiencies dominate Iran’s trade performance: approximately 96.5% of variations in trade efficiency are attributed to internal mismanagement, while only 3.5% are explained by random shocks. These findings suggest that improving domestic trade management and strategic regional partnerships are key to enhancing Iran’s trade performance in the MENA region.

Keywords

Main Subjects

References

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Economic Policies and Research
Volume 4, Issue 3 - Serial Number 15
October 2025
Pages 107-133

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