The effect of economic sanctions on the volume of trade of the Islamic Republic of Iran with emphasis on the international trade of goods

Document Type : Original Article

Authors

1 Assistant Professor, Economics Department, Faculty of Economics and Management, University of Sistan and Baluchestan, Zahedan, Iran (reza_ash@eco.usb.ac.ir).

2 University of Hormozgan

3 Shahid Bahonar University of Kerman, Kerman, Iran

10.48308/jem.2024.236151.1928

Abstract

Economic sanctions are used as a tool to exert pressure on the target country, imposing irreparable consequences on economies. Considering this, it is of utmost importance to investigate these consequences and how to deal with sanctions in order to reduce the damage to the economy significantly. Therefore, the aim of this study is to examine the impact of economic sanctions imposed based on the International Standard Industrial Classification codes by the United States, the United Nations Security Council, and the European Union on Iran's trade volume during the period 1979-2019. One of the innovations of this research is the extraction of a quantitative index for the economic sanctions imposed against the Islamic Republic of Iran using a fuzzy approach. In this stage, after extracting the data related to the sanction intensity, the impact of economic sanctions against Iran on the trade volume of the Islamic Republic of Iran based on the International Standard Industrial Classification codes was investigated using combination (panel) models. The results indicate that exchange rate and inflation variables have a significant positive impact on non-oil exports volume. economic sanctions have a significant negative impact on non-oil export volume, and economic sanctions and exchange rate have a significant negative impact on the volume of imports of the Islamic Republic of Iran, while inflation has a positive and significant effect on the volume of imports. This confirms the hypothesis of the negative impact of economic sanctions on the non-oil trade volume of the Islamic Republic of Iran.

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