Development of countries under sanctions: Iran and Russia

Abstract

Relevance. The modern world economy is going through a period of ‘sanctions wars’ between countries waged openly or covertly through international institutions, with Russia and Iran serving as vivid examples of the first and second cases, respectively. In this connection, it is increasingly useful to analyze the economic development of countries under sanctions in order to gain new insights into how countries function in this changing reality. Research objective. The study aims to comparatively examine the macroeconomic development of Iran and Russia during the sanctions period through a comparative and statistical dynamics analysis of the main macro indicators, including the growth rate and value of base-period GDP, consumption expenditures, gross capital formation, export, import, etc. In theoretical terms, the description of sanctions as an instrument for harming economic development is chosen as a secondary aim in this work. Data and methods. The study is based on the methodology of international comparisons and an analysis of statistical data that can be used to assess the impact of various sanctions on economic development. Results. The uncertain impact of sanctions on economic development is confirmed. The analysis of empirical data collected over a twenty-year period, reveals no clear connection between the dynamics of indicators and the imposition of sanctions (both for Iran and Russia), which is confirmed by an empirical analysis of available time series. Although in some industrial areas, difficulties were observed. In addition, with the imposition of more stringent sanctions in 2012, the Iranian economy experienced a significant decline, followed by its recovery during the adaptation period. Conclusions. A counter-sanctions policy requires the integrative cooperation of targeted countries, which opens up new frontiers of collaboration between Iran and Russia. New forms of international labor division should be created to eliminate the possibility of some countries using sanctions as an instrument against others.