The Survey of the Comparative Advantage of Iran in Production and Export of Hand Made Carpet (Case Study: Isfahan Province)

Abstract

One of the striking phenomena in recent years has been the speed of globalization. Iran has been preparing the ground for joining WTO with the purpose of boosting her non-oil exports and taking full advantage of international market opportunities. However, questions remain on which of the non-oil sectors Iranian economy can compete most effectively, once integrated into global markets. The answer to this question has a bearing on the investment and structural reforms that are needed before Iran enters the highly competitive global environment. The problem, therefore, is to study the comparative advantage of and support given to the various sectors in the Iranian economy. Since the hand made carpet industry is one of the sectors that promises a highly non-oil export potentialities, this paper concentrates on this industry and utilizes the Policy Analysis Matrix (PAM) to calculate indices of comparative advantage in the hand made carpet industry (case study of Isfahan's hand made silk carpets). Results show that the index of the competitive ability of Isfahan's hand made silk carpets is 88% and its comparative advantage based on unit cost that would hold when Iran joins WTO is 79%. These indices indicate that Isfahan's hand made silk carpets scores high both in terms of competitive ability and comparative advantage.