Investigating the Impact of Economic Sanctions and Exchange Rate Uncertainty on FDI in Iran: A Fuzzy Approach

Document Type : Original Article

Authors

1 Ph.D Candidate in Economics, Faculty of Economics and Management, University of Tabriz, Tabriz, Iran

2 Associate Professor of Economics, Faculty of Economics and Management, University of Tabriz, Tabriz, Iran

3 Professor of Economics, Faculty of Economics and Management, University of Tabriz, Tabriz, Iran

4 Assistant Professor of Economics, Faculty of Economics and Management, University of Tabriz, Tabriz, Iran

Abstract

Today, foreign direct investment is an important factor in creating economic changes for all countries and especially developing countries. Therefore, considering the importance of foreign direct investment in the Iranian economy, the present study has examined the effect of economic sanctions and exchange rate uncertainty on FDI in Iran using fuzzy regression model for the period 1990-2018. The results show that high-intensity sanctions, which were mostly economic and comprehensive sanctions (such as the Central Bank and Iran oil sales sanctions), had a much deeper impact on capital inflows than low-intensity sanctions. It also shows that the main obstacle to attracting foreign direct investment in Iran is the severe sanctions, which, overshadow other factors and have greatly reduced the incentives for foreign direct investment in Iran. Also, according to other findings, exchange rate uncertainty has a negative effect on attracting foreign direct investment in Iran. This finding confirms that the exchange rate uncertainty in the Iranian economy has created an environment of uncertainty for investors to make decisions.

Keywords

References

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