The Effect of Economic Sanctions on Iran's Exports

After the Islamic Revolution of 1978, Iran has been affected by economic sanctions imposed by Western countries especially the U.S. Since 2006 and with the development of the Iranian nuclear conflict, the United Nations has frequently imposed economic and financial sanctions against Iran. As a result of these international restrictions and their administration by an international organization, Iran’s has been heavily influenced. This study seeks to address the questions whether the economic sanctions imposed against Iran’s exports have been effective. And if yes, what is the extent of this effectiveness. Due to the fact that the sanctions imposed on Iran have been at first less economic and they have intensified over time, the effect of the sanctions in the three years of 2012, 2013, and 2014 have been examined by the fixed-effects Gravity model extracted from the model of Anderson and van Wincoop. In addition, all the trade relations and models considered have been estimated through the PPML method to estimate the unbiased coefficients, in order to use all the data and to avoid the problem of zeros. According to the results, the sanctions imposed against Iran have had a significant and negative effect on the amount of exports in Iran to all its trading partners considered in all the given years. The examination of the coefficients during the years 2012, 2013 and 2014 show that Iranian exports have fallen annually by 33 percent in average and the total loss for these three years was 104 billion dollars.