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Have Sanctions Modified Iran’s Trade Policy? An Evidence of Asianization and De-Europeanization through the Gravity Model

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  • Liudmila Popova

    (Department of World Economy, Faculty of Economics, Saint Petersburg State University, St. Petersburg 191123, Russia)

  • Ehsan Rasoulinezhad

    (Department of World Economy, Faculty of Economics, Saint Petersburg State University, St. Petersburg 191123, Russia)

Abstract

This study is an empirical attempt to find out whether under sanctions Iran’s trade direction has shifted away from Europe (trade policy of de-Europeanization) towards Asia (trade policy of Asianization). The analysis is conducted using a panel-gravity trade model to analyze bilateral trade pattern between Iran and 50 countries from the EU and Asia during the period 2006–2013. To this end, the authors use an extended gravity model by adding new variables, including the index of Chinn–Ito (KAOPEN) as an indicator of financial openness, and the composite trade intensity (CTI) as an indicator of trade openness. Our findings reveal that the gravity equation fits the data reasonably well. The empirical evidence indicates a significant negative effect of sanctions on Iran–EU bilateral trade (by an average of 46.9%), while it has a positive impact on trade between Iran and the Asian countries (by an average of 85.2%). Overall, these findings confirm that the imposition of various sanctions related to Iran’s nuclear program has pushed the country’s foreign trade to reorient away from Europe towards Asia.

Suggested Citation

  • Liudmila Popova & Ehsan Rasoulinezhad, 2016. "Have Sanctions Modified Iran’s Trade Policy? An Evidence of Asianization and De-Europeanization through the Gravity Model," Economies, MDPI, vol. 4(4), pages 1-15, October.
  • Handle: RePEc:gam:jecomi:v:4:y:2016:i:4:p:24-:d:81608
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    3. Allah Morad Seif & Hossein Panahi & Davoud Hamidi Razi, 2017. "An Estimation of The Impact of Economic Sanctions and Oil Price Shocks on Iran-Russian Trade: Evidence from a Gravity- VEC Approach," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 21(3), pages 469-497, Summer.
    4. Yu, Xiaofan & Wang, Jin, 2023. "Enhancing sustainable trade of mineral resources between China and African Great Lakes economies: Recommendations for action," Resources Policy, Elsevier, vol. 85(PB).
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    6. Forat Suliman & Homam Khwanda, 2020. "External Sector: Between Congestion and Sanctions—‘Syrian Economy Case, 1987–2018’," Foreign Trade Review, , vol. 55(3), pages 382-401, August.
    7. Ehsan Rasoulinezhad, 2018. "A new evidence from the effects of Russia’s WTO accession on its foreign trade," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 8(1), pages 73-92, April.

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