A Study of Unilateral and Multilateral Sanctions Effectiveness on Iran's Non-Oil Foreign Trade Products

Alireza Kazerooni (), Adel Ghorbani () and Reza Saghafi ()
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Alireza Kazerooni: University of Tabriz
Adel Ghorbani: University of Tabriz
Reza Saghafi: University of Tabriz

Quarterly Journal of Applied Theories of Economics, 2015, vol. 2, issue 1, 83-98

Abstract: In this study, the impact of economic sanctions on Iranian trade flow with the 73 main trading partners has been estimated over the period 2001 to 2012 by using a modified gravity model as well as two stages GMM dynamic panel data technique. To investigate the impact of economic sanctions on Iran's foreign trade, the sanctions effect has been examined on Iranian trade with all trading partners. The results have shown that US unilateral sanctions on Iran's foreign trade has no significant effect. But multilateral sanctions have had a significant negative effect on Iran's foreign trade. Impact of sanctions on Iran's trade with third party countries is examined in a separate model. In this section, the ability of a country to escape and evade sanctions (a sanction busting hypothesis) has been tested. The results of estimations indicate that the unilateral sanctions do not have a significant effect on the volume of Iranian trade with third countries. In other words, Iran has been able to limit and control the United States unilateral sanctions by Trade expansion with third countries. But multilateral sanctions have had a significant negative impact on the Iran's trade with these countries. This result confirms the hypothesis Unilateral sanction-busting for the Iran's economy.

Keywords: Unilateral and Multilateral Sanctions; Irans Foreign Trade; Gravity Model; Dynamic Panel Data. (search for similar items in EconPapers)
JEL-codes: C10 F11 F12 F51 (search for similar items in EconPapers)
Date: 2015
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