Analysis of Iran's Commercial Multilateralism for Optimal Use of the Geopolitical Position of the Shanghai Cooperation Organization (SCO)

Introduction: Trade has long been one of the main engines of economic growth and development of countries and almost all economists, economic schools and thinkers have paid great attention to it. In line with Iran's accession and considering the importance of trade development between Iran and the member countries of the Shanghai Cooperation Organization (SCO), this study examines the multilateralism of Iran's trade with other members of the Shanghai Cooperation Organization, toexamines the multilateralism of Iran's trade with other members of the Shanghai Cooperation Organization for optimal use of its geopolitical position in the period of 2017-2020. Research Question: The main question of this research is: Is Iran moving towards convergence with different groups? Will convergence with the Shanghai Group help the Iranian economy? What is the degree of similarity between Iranian trade and members of the Shanghai Group? What variables are important for Iran's convergence with the Shanghai group?
Research Hypothesis: The hypothesis of this research is as follows: Iran's economy is moving towards convergence with different groups. Convergence with the Shanghai Group helps the Iranian economy. The degree of similarity between Iranian trade and members of the Shanghai Group is high. The variables of population, distance and GDP are important on the convergence of Iran with the Shanghai group.
Methodology (and Theoretical Framework if there are): To calculate the commodity composition of trade and the intensity of similarity of exports and imports between Iran and the eight countries of the Shanghai Cooperation Organization between 2017 and 2020, two Cosine indexes and the Finger-Kreinin (FK) index have been used. Also, the studies were performed using Finger-Kreinin (FK) similarity index and Cosine index as well as data panel model with random effects.
Results and Discussion: According to the Cosine index, the highest value is obtained for Pakistan (0.610869) and then India (0.545614), and the lowest similarity is obtained with Uzbekistan (0.269423), Russia (0.250048), and Kazakhstan (0.221851). According to Finger-Kreinin (FK) index, the highest degree of similarity with Pakistan and India with (44.5385) and (40.51033) and the lowest degree of similarity with Uzbekistan (28.19768) then Russia (27.3071) and Kazakhstan (25.08058) is calculated. Therefore, the correlation co-efficient of the results obtained from the two Cosine indexes and the Finger-Kreinin (FK) index is clear that this value (0.86499898) has been obtained, which indicates the high correlation of the above two indices in a way that confirms the results of each other. That is, in the Finger-Kreinin (FK) index and the index of Cosine, it has a high correlation with Pakistan and India. It also has the least degree of similarity with the countries of Uzbekistan, Russia and Kazakhstan. The results panel data model with random effects showed that the coefficients of distance, population, and GDP in both models were meaningless. Population variables in both methods had a positive effect on Iranian trade and the GDP variable had a negative effect on Iranian trade. On the other hand, the distance variable in estimating the model is negative with Finger-Kreinin (FK) index and positive in the Cosine index. Interpretation of the results obtained from estimating the patterns implies that; The coefficients of distance variability in both models are meaningless, i.e. Iran's trade plan is not based on using the potential of closer countries. The variable coefficients of GDP indicate the power of the opposite country to absorb the goods of Iran, which is meaningless in both models. Variable population coefficients have been obtained in both meaningless models, i.e. Iran's trade plan is not based on the use of crowded markets and their demand. Therefore, the findings of estimating the patterns indicate that Iran has not yet revised its trade plan in accordance with the optimal use of the Shanghai Group's geopolitical opportunities. Also, real-world statistics show that China, although both in terms of population and GDP can be a good opportunity for the export of Iranian goods, has a significant role in Iran's import basket. Despite both of these advantages, Iran's supplies only 0.16 percent of the Russian economy, much less than one percent. Despite having all three geopolitical advantages of proximity, distance, high population, and high economic growth, India has a very small place in Iran's trade basket. Despite its economic strength, large population, and bordering Iran, Pakistan has not yet received much attention in the trade basket with Iran. Tajikistan and Uzbekistan, in addition to Shanghai Group, joint membership in ECO Economic Cooperation Group, as well as Kazakhstan, Kyrgyzstan, in addition to Shanghai Group, joint membership in ECO and Eurasian Economic Union as well as the proximity of distance and growing economies, have a low place in the business map of Iran. Therefore, real-world statistics show that Iran has not yet modified its trade plan to make the most of the Shanghai Group's geopolitical opportunities.
Conclusion: According to the results obtained from the estimation of patterns as well as real-world statistics, both of which do not take advantage of the opportunity to join the Shanghai Group and make the best use of its geopolitical position, the following policy recommendations are proposed: 1-  fundamental revision of Iran's trade plan has been made and Iran's trade portfolio has been targeted and tracked based on the benefits of proximity, population and economic growth of countries to make the most optimal use of membership in the Shanghai Group to develop Iran's trade. 2- Iran should make efforts to complete and make good use of the south-north corridor as soon as possible, because a major part of the geopolitical position of trade with China, India, and Pakistan can be expanded with the completion of this project, especially the Chabahar port project. It can be very helpful in this direction. 3- Iran must do everything in its power to position and use the new Silk Road, i.e. the connecting corridor (one belt-one road), because this project is the most important commercial geopolitical megaproject in the current situation.