The importance and Competition Intensity of Cross-Border Electricity Trade of Iran in West Asia Community, using Trade Network Theory

Document Type : Research Paper

Authors

1 Department of Economics, Ph.D Candidate, Department of Economics, Faculty of Social Sciences and Economics, Alzahra University, Tehran, Iran.

2 Associate Professor, Department of Economics, Faculty of Social Sciences and Economics, Alzahra University, Tehran, Iran.

3 Department of Economics, Faculty of Social Sciences and Economics, Alzahra University, Tehran, Iran.

4 Assistant Professor, Department of Economics, Niroo Research Institute, Tehran, Iran.

10.22103/jdc.2022.19086.1210

Abstract

Objective: This study aims to model electricity cross border trade policy based on the network theory and to investigate the position and importance of West Asia community in the global electricity trade network. The cohesion in the electricity trade between countries will ensure the security of electricity supply and reduce costs. West Asia community is a group of countries in the network that includes Iran.
 Method: For this purpose, the global network is constructed to examine the role of each node in the network for the time period of 2010-2018. Different communities are identified to proceed with the network analysis. We detect the communities based on the Louvain method as it has the large z-scores for all years and it’s an efficient algorithm. An innovative analysis is introduced; that is competitiveness to capture the competition intensity among electricity exporters. To capture the competition intensity between two electricity exporters, we use Glick and Rose (1999) suggested indicator.
 Results of this study clearly show the influence and necessity of Iran for stabilizing of the network within its community. Iran mostly has electricity trade with seven of its neighboring countries, which are Turkey, Pakistan, Iraq, Afghanistan, Turkmenistan, Azerbaijan and Armenia. Among them, Iran exports electricity to three countries, Afghanistan, Pakistan and Iraq, and conducts bilateral trade with four other partners.
The results of the competition intensity suggest more interconnectedness among community members, and show Iran compete with Turkey, Azerbaijan and Russia on the regional market share. The competition intensity trend, extracted from the competition networks, escalated during the time period. Also Iran is a key node of its community in the competition networks. Finally, it is showed that electricity trade can be increased between Iran and other regional partners. Also based on all different kind of the centrality measures, Iran is the most important node in these networks. All in all, the competition intensity networks for the region, depict intense competition among the nodes, and especially Iran is considered to be the most central node, showing the highest competition relation with its partners. Turkey in the first years and Azerbaijan in the last years of the period are in second place in terms of the competition intensity (These extracted competition networks can be scrutinized in details that give researchers crucial information about the condition of export competition).
 Conclusion: Community of Iran usually consists of Iraq, Afghanistan, Pakistan, Tajikistan, and Uzbekistan, Turkey and Armenia. The position of Iran within its community has been scrutinized. For the first part, among all, community of Iran is in the middle ranking (for example, 8 and 10 among 16 and 15 communities in 2011 and 2018, respectively) based on the total weight. The share of weight of this community to the total trade, varies between 0.2% in 2015 to 14.7% in 2014. By conducting a measure for finding trade hubs in different communities, it’s been found Iran had the greatest score and considered to be the trade hub in west Asia region. Its score in some years puts it among top five trade hubs in whole network (for 4 years).
There are eight main electricity importers from Iran. From this aspect, this importing markets have been examined to identify the rivals. In terms of Afghanistan, Iran has the second place after Uzbekistan. In case of Turkey, in the first half of the period, Iran is the biggest exporter, but it started to compete and give away its position to Bulgaria, Azerbaijan and Georgia. Armenia imports from just Iran and Georgia till 2015. The trend in trade of Azerbaijan is similar to Turkey. Iran is the biggest exporter in the first years, but Russia and Armenia gradually took the position. so as a summary, Iran in terms of export to Iraq, Pakistan and Turkmenistan has the dominant share in all years; but in other markets like Afghanistan, Armenia and Azerbaijan, it’s competing; and in Turkey it’s losing the competition. The results from competition measure support the real data.

Keywords

Main Subjects

References

آذربایجانی، کریم؛ طیبی، سید کمیل؛ صفادرگیری، حلیمه (1394). اثر تحریم های اقتصادی ایالات متحده و اتحادیة اروپا بر تجارت دوجانبه ایران و شرکای عمدة تجاری آن: کاربرد مدل جاذبه. تحقیقات اقتصادی، 50(3)، 562-539.
شیرازی، همایون؛ آذربایجانی، کریم؛ سامتی، مرتضی (1394). بررسی جایگاه ایران در تجارت بین المللی: یک رهیافت شبکه. تحقیقات اقتصادی، 50(4)، 902-881.
رفاح کهریز، آرش؛ محمدزاده، یوسف؛ محسنی زنوزی، سیدکمال الدین؛ هاشمی برنج آبادی، نیر؛  قاسم زاده، نگار (1398). تأثیر رقابت‌پذیری بر عملکرد اقتصادی در کشورهای منتخب در حال توسعه و توسعه‌یافته. سیاست های راهبردی و کلان، 7(1)، 107-86.
رفعت، منیره (1397). کاربرد تکنیک تحلیل شبکه در بررسی روابط چندجانبه تجاری ایران با مهم ترین شرکای تجاری در آسیا. تحقیقات مدل سازی اقتصادی، 9(34)، 137-107.
شیوا، رضا؛ شهبازی، معصومه (1399). ارزیابی وضعیت رقابت پذیری و تأثیر قدرت بازاری بر قیمت برق: مطالعه موردی بازار عمده فروشی برق ایران. پژوهش‌های سیاست‌گذاری و برنامه‌ریزی انرژی، 5(18)، 108-67.
طاهری‌فرد، علی؛ اخوان، مهدی (1388). محاسبه صادرات مستقیم و غیرمستقیم برق و یارانه ضمنی پرداختی بخش برق به بخش صادرات با استفاده از جدول داده ستانده. بررسی‌های بازرگانی، 7(37)، 8-2.
لطفعلی‌پور، محمدرضا؛ نوروزی، روح‌اله؛ آشنا، ملیحه؛ ذبیحی، مریم (1388). بررسی تأثیر الحاق به سازمان جهانی تجارت بر صادرات برق ایران. مدلسازی اقتصادی، 3(3)، 202-177.
شرکت مادرتخصصی وزارت نیرو (1395). چهل و نه سال صنعت برق ایران در آینه آمار 1394-1346.
References
Abrell, J., Rausch, S. (2016). Cross-country electricity trade, renewable energy and European transmission infrastructure policy. SSRN Electronic Journal, 10.2139/ssrn.2713900.
Adams, S., Atsu, F., Klobodu, E., Richmond, L. (2020). Electricity transmission, distribution losses and economic growth in South Africa. Heliyon, 6. e05564. 10.1016/j.heliyon.2020.e05564.
Aller, C., Ductor, L., Herrerias, M.J. (2015). The world trade network and the environment. Energy Economics, 52, 55–68.
Antweiler, W. (2016). Cross-border trade in electricity. Journal of Int. Economics, 101, 42–51.
Ateba, B., Prinsloo, J.J., Gawlik, R. (2019). The significance of electricity supply sustainability to industrial growth in South Africa. Energy Reports, 5, 1324-1338.
Azarbayejani, K., Tayebi, S., Safa Dargiri, H. (2015). The effect of US and EU economic sanctions on bilateral trade flows between Iran and its major trading partners: An application of gravity model. Tahghighat-e-Eghtesadi, 50(3), 539-562 [In Persian].
Baláž, P., Hamara, A., Sopková, G. (2017). Konkurencieschopnosť a jej význam v národnejekonomike: (Zmeny a výzvy v období globálnej finančnej kríz y) (2. vyd).Bratislava: Sprint 2.
Bhattacharya, K., Mukherjee, G., Manna, S. (2007).  The international trade network, In: Chatterjee A, hakrabarti B (eds), Econophysics of markets and business networks, Springer, Milan.
Best, R., Burke, P.J. (2018). Electricity availability: A precondition for faster economic growth?. Energy Economy, 74, 321–329.
Blondel, V.D., Guillaume, J.L., Lambiotte, R., Lefebvre., E. (2008). Fast unfolding of communities in large networks. Journal of Statistical Mechanics, P10008, https://doi.org/10.48550/arXiv.0803.0476.
Bowen, B.H., Sparrow, F.T., Yu, Z. (1999). Modeling electricity trade policy for the twelve nations of the Southern African Power Pool (SAPP). Utilities Policy, 8, 183–197.
Brandes, U. (2001). A faster algorithm for betweenness centrality. Journal of Mathematical Sociology, 25(2), 163–177.
Brandes, U., Delling, D. Gaertler, M., Gorke, R.H.M., Nikoloski, Z., Wagner, D. (2008). On Modularity Clustering. IEEE Trans Knowl Data, Eng, 20(2), 172–188.
Bris, A. (2018). IMD World Competitiveness Center. Retrieved February 4, 2019, from https://www.imd.org/wcc/ world-competitiveness-center.
Čekmeová, P. (2016). Konkurencieschopnosť ako cieľ hospodárskej politiky. Politická Ekonomie: Teorie, Modelování, Aplikace, 64 (3), 338–350.
Chandran, G., Sharma, S., Madhavan, K. (2010). Electricity consumption-growth nexus: The case of Malaysia. Energy Policy. 38. 606-612.
Dagoumas, A., Koltsaklis, N., Panapakidis, I. (2017). An integrated model for risk management in electricity trade. Economics, 15, 313–321.
Dong, G., Qing, T., Tian, L., Du, R., Li, J. (2021). Optimization of crude oil trade structure: A complex network analysis. Complexity, 2021.
Duenas, M., Fagiolo, G. (2013). Modeling the international-trade network:  A gravity approach. Journal of Economic Interaction and Coordination, 8, 155-178.
Ebhota, W.S., Tabakov, P.Y. (2018). Power inadequacy, the thorn in economic growth of Nigeria. International Journal of Applied Engineering Research, 13(16), 12602–12610.
Etokakpan, M., Osundina, O., Victor B.F., Asumadu S. (2020). Rethinking electricity consumption and economic growth nexus in Turkey: environmental pros and cons. Environmental Science and Pollution Research, 24. 10.1007/s11356-020-09612-4.
Fell, H., Li, Sh., Paul, A. (2014). A new look at residential electricity demand using household expenditure data. International Journal of Industrial Organization, 33, 37–47.
Ferguson, R., Hill, R., Craggs, C. (1997). Benefits of electricity generation. IEE Engineering Science and Education Journal, 6(6), 255-259.
Gaur, V., Gupta, E. (2016). The determinants of electricity theft: An empirical analysis of Indian states. Energy Policy, 93, 127–136.
Glick, R., Rose, A.K. (1999). Contagion and trade: Why are currency crises regional? Journal of International Money and Finance, 18(4), 603–617.
Grando, F., Noble, D., Lamb, L. (2016). An analysis of centrality measures for complex and social networks. In: 2016 IEEE Global Communications Conference (GLOBECOM), pp. 1-6. 10.1109/GLOCOM.2016.7841580.
Guimerà, R., Amaral, L.A.N. (2005) Cartography of complex networks: modules and universal roles. Journal of Statistical Mechanics: Theory and Experiment, 02, P02001.
IEA. (2021). Global energy review 2021. IEA, Paris, https://www.iea.org/reports/global-energy-review-2021.
Ji, L., Jia. X, Chiu. A., Xu. M. (2016). Global electricity trade network: Structures and implications. PLoS ONE, 11(8), https://doi.org/10.1371/journal.pone.0160869.
Kraft, J., Kraft, A. (1978). On the relationship between energy and GNP. Energy and Development, 3, 401-403.
Krnc, M., Sereni, J.S., Skrekovski, R., Yilma, Z.B. (2015). Eccentricity of networks with structural constraints. Discussiones mathematicae graph theory. University of Zielona Góra, 40(4), 1141–1162.
Lise, W., Linderhof, V., Kuik, O., Kemfert, C., Stling, R., Heinzow, Th. (2006). A Game theoretic model of the northwestern european electricity market, market power and the environment. Energy Policy, 34, 123–126.
Liu, Y., Shi, X., Laurenceson, J. (2020). Dynamics of Australia's LNG export performance: A modified constant market shares analysis. Energy Economics, 89, 104808. 10.1016/j.eneco.2020.104808.
Lotfalipour, M., Noruzi, R., Ashena, M., Zabihi, M. (2009). The effects of accession to world trade organization on electricity exports of Iran. Economic Modelling, 3(3), 177-202 [In Persian].
Neha Chhabra, R., Basu, S. (2020). Seasonal effect and electricity trading market—an emerging nation experience. The Electricity Journal, 33(7), 1-12.
Nevima, J. (2014). Konkurenceschopnost regionů Visegrádské čtyřky (Teoretické an empirické přístupy kvymezení, měření a hodnocení). Praha: Professional Publishing.
Newman, M.E.J., Girvan, M. (2004). Finding and evaluating community structure in networks. Physical Review, E 69, 026113.
Petridis, N., Petridis, K., Stiakakis, E. (2020). Global e-waste trade network analysis. Resources, Conservation and Recycling, 158. 104742. 10.1016/j.resconrec.2020.104742.
Rafat, M. (2019). The application of complex networks analysis to assess Iran's trade and it's most important trading partners in Asia. Journal of Economic Modeling Research, 9(34), 107-137 [In Persian].
Refah Kahriz, A., Mohammadzadeh, Y., Mohseni Zonouzi, S.J., Hashemi Berenjabadi, N., Ghasemzadeh N. (2019). The effect of competitiveness on economic performance in selected developing and developed countries. Quarterly Journal of the Macro and Strategic Policies, 7(25), 86-107 [In Persian].
Roubaud, D., Shahbaz, M. (2017). Financial development, economic growth, and electricity demand: A sector analysis of an emerging economy. Journal of Energy and Development, 43, 47-98.
Shahbaz, M., Lean, H.H. (2012). The dynamics of electricity consumption and economic growth: A revisit study of their causality in Pakistan. Energy, 39, 10.1016/j.energy.2012.01.048.
Shakouri H., Eghlimi, M., Manzoor, D. (2009).  Economically optimized electricity trade modeling: Iran–Turkey case. Energy Policy, 37, 472–483.
Shirazi, H., Azarbaiejani, K., Sameti, M. (2016). Iran’s position in the world trade: A network approach. Tahghighat-e-Eghtesadi, 50(4), 881-902 [In Persian].
Shiva, R., Shahbazi, M. (2020). Investigating the competition status and the impact of market power on electricity price: case of Iran's wholesale electricity market. Journal of Energy Planning and Policy Research, 6(18), 67-108 [In Persian].
Srinivasan, S. (2013). Electricity as a traded good. Energy Policy, 62, 1048–1052.
Steinhauser, D., Ružeková, V. & Kittová, Z. (2020). Export performance as a measurement of competitiveness. Journal of Competitiveness, 12, 145-160.
Taherifard, A., Akhavan, M. (2009). Estimation of direct and indirect electricity export and embodied energy subsidy of electricity in export sector, by using output-input. Commercial Surveys, 7(37), 2-8 [In Persian].
Tavanir Holding Company. (2016). Statistical report on 49 years of activities of Iran electric power industry (1967-2015) [In Persian].
Tennbakk, B. (2000). Power trade and competition in Northern Europe. Energy Policy, 28, 857-866.
Torreggiani, S., Mangioni, G., Puma, M., Fagiolo, G. (2018). Identifying the community structure of the international food-trade multi network. Environmental Research Letters, 13, 1-14.
Wagner, S., Neshat, N. (2010). Assessing the vulnerability of supply chains using graph theory. International Journal of Production Economics, 126, 121-129.
Wasserman, S., Faust, K. (1994). Social network analysis: Methods and applications, (Vol. 8). Cambridge University Press.
Xi, X., Zhou, J., Gao, X., Wang, Z., Si, J. (2020). Impact of the global mineral trade structure on national economies based on complex network and panel quantile regression analyses. Resources, Conservation and Recycling, 154, 104637. 10.1016/j.resconrec.2019.104637.
Zhang, H-Y., Ji, Q., Fan, Y. (2014). Competition, transmission and pattern evolution: A network analysis of global oil trade. Energy Policy, 73, 10.1016/j.enpol.2014.06.020.
Zhang, H., Wang, Y., Yang, C., Guo, Y. (2021). The impact of country risk on energy trade patterns based on complex network and panel regression analyses. Energy, 222, 1-11.
Zhong, X., Jiang, H., Zhang, C., Shi, R. (2019). Electricity consumption and economic growth nexus in China: an autoregressive distributed lag approach. Environmental Science and Pollution Research, 26, 10.1007/s11356-019-04699-w.

Files

History

  • Receive Date: 27 February 2022
  • Revise Date: 14 March 2022
  • Accept Date: 19 April 2022

Share

How to cite

Statistics