The impact of international economic sanctions on iran's trade pattern An empirical analysis

Hossein Motavali Habibi, Gholamreza Zamanian, Javad Herati

The aim of this study is to investigate the effect of unilateral and multilateral economic sanctions against Iran on changing the pattern of Iran's trade with its trading partners. In this paper, with using the Panel Gravity Model, an analysis of the pattern of bilateral trade between Iran and 50 countries from the European Union and Asia during the period 2006-2016 has been addressed. For this purpose, this paper presents an extended gravity model with the addition of new variables, including the Chinn-ito index as an indicator of the freedom of financial relationships and the intensity of combined trade (CTI) as an indicator of trade openness for entering economic boycott variables. The results of the study indicate that the decline in trade with Europe due to sanctions on Iran has changed Iran's trade from Europe to new markets in order to prevent economic collapse and ensure the survival of the import substitution policy. This shift has, in the first place, led to a significant increase in Iran's trade volume with Asian countries, in particular with China and India, as well as the promotion of trade relations with other Asian countries.

Volume 12 | 02-Special Issue

Pages: 858-872

DOI: 10.5373/JARDCS/V12SP2/SP20201143