Abstract

One of the responses of countries to deal with the phenomenon of globalization is economic and regional integration. Today, along with globalization, the debate on the economic and regional integration has also been flourished in various parts of the world. Islamic countries by relying on their advantages and different economic capabilities can increase flows of foreign investment, followed by, higher level of economic growth, to cope with globalization trend. Establishment of common economic union by reducing trade restrictions and barriers can, in one hand, increase openness, level of trade, production and growth. On the other hand, increasing the volume of trade between member countries can increase transfer of possible fluctuations between them. The purpose of this study was to investigate the relationship between trade intensity and business cycle synchronization between the Islamic Republic of Iran and other members of the OIC. To estimate the model, panel data approach for the period 1994–2011 were applied.
This study used a panel of bilateral trade and business cycle data spanning 9 selected member countries over 18 years. The results showed although, there is a correlation between the business cycle in selected countries of OIC, but due to lack of homogeneity degree of development and economic structure of members, intensity of correlation between business cycles are not the same. Therefore, it is suggested that the anti–Cycle economic policies should be made with caution.