The Analysis of the Effect of Tax Tariffs and Trade Flows on Income Gap in Gravity Model for Member Countries in OPEC

Document Type : Original Research

Authors

1 Associate Professor, Department of Economics, Semnan University, Semnan, Iran

2 Ph.D. Student of Economic Sciences, Department of Economics, Semnan University, Iran

Abstract

Income convergence or income similarity is defined as crack of income per capita between two trade companies in a way that fewer cracks carries more income similarity or convergence and more crack carries income divergence. Income convergence plays important role in developing trade relationship with this explanation that whatever countries are match in terms of income, they will have closer demand and more same economic policies and they will have enough economic justification in developing trade and forming trade blocks. In this study, the existence of interaction of income convergence and developing trade flows and study of tax tariffs in countries member in OPEC group with using of gravity model has been studied. To do this, a gravity trade model is used. The results indicate that trade flow of country i to country j in time t has had negative effect on income crack. GDP of country i in time t has had positive effect on income crack. GDP of country j in time t has had negative effect on income crack. The population of exporter country in time t has had negative effect on income crack. The population of importer country in time t has had positive effect on income crack. Opening degree of the economy of importer country (the way of calculating this index from the ratio of total export and import to GDP) has had negative effect on income crack. The variable of tax tariffs has had positive effect on income crack. Physical distance of country i from country j based on Kilometer has not had significant effect on income crack. The variable of trade policy has not had significant effect on income crack. The index of same line and language has not had significant effect on income crack.

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References

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