Investigation of commercial potential and prospects of development in Iran-Azerbaijan business relations using gravity model

Document Type : Original

Authors

1 Department of Economics and Management, Faculty of International Relations and Economics, Baku State University, Baku, Azarbaijan.

2 Department of Economics, Faculty of International Economics, University of Cooperasiya, Baku, Azarbaijan.

Abstract

Economic and commercial relations between Iran and the Republic of Azerbaijan were formed from the early years of Azerbaijan's independence, and in a short period of time, Iran became the largest trading partner of Azerbaijan. But after 1997-98, the trade relations between the two countries became unstable and took a downward trend. Why the two countries could not achieve mutual economic-commercial dependence or sustainable regional economic dependence? The reason for this question can be addressed from different aspects. In this study, from the perspective of economic development, international politics, social and historical factors the level of bilateral economic-commercial relations has been investigated and the potential of mutual trade between the two countries has been calculated and evaluated using the gravity model for the time period of 1991-2018. The obtained results show, although the two countries despite having effective and positive connecting factors on economic and commercial relations such as proximity to production and consumption centers, extensive customs and border facilities, free zones and common markets, cultural and linguistic commonalities, have not been able to sufficiently benefit from the potentials and positive effects of the above linking factors to expand business relations. However, estimation model shows that if the above factors and existing capacities are optimally used, more stable economic relations and the volume of mutual trade between the two countries can be expanded to at least twice (100%) the current volume and by removing obstacles such as financial, banking and customs obstacles, the volume of exchanges can be expanded even several times.

Keywords

Main Subjects

حوزة موضوعی: ایران و آذربایجان

Scope: Iran and Azerbaijan

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Journal of Countries Studies
Volume 2, Issue 3
2024
Pages 353-377

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History

  • Receive Date: 02 January 2024
  • Revise Date: 16 January 2024
  • Accept Date: 21 January 2024

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