The Effects of Economic Sanctions on Private Investment in Iran

Every economy needs some production factors for its growth and development. No country can just rely on its internal resources to experience economic growth. But special attention should be paid to international resources to increase its domestic power production in economic sanctions, which lead to the loss of economic security for domestic and foreign factors of production and reduction of international and domestic sources. Then factors of production abroad do not enter the domestic economy of a country, and domestic resources start to leave the country. Sanctions, by creating economic insecurity (high risk), reduce willingness to invest and reduce swelling in the supply side of the economy at the macro level. Investment expenses are known as a stimulus force for economic growth and development. In fact one of the variables that can be changed by changing the macro variables is investment. Private investment, is a part of the total investment in which monetary policy can make many changes. The aim of this study was to evaluate the effect of economic sanctions on private sector investment in Iran by using ordinary least squares (OLS) between the years 1959 to 2008, respectively. Results showed a significant relationship between economic sanctions and long-term private investment in Iran.