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Sanctions and Exports Deflection: Evidence from Iran


  • Jamal Ibrahim Haidar


I uncover the existence, extent, and mechanism of exports deflection, which followed exports destruction, after the imposition of exports sanctions against Iranian exporters. Using highly dis-aggregated data about Iranian non-oil exports, I show how exporter size, past export status, and pricing strategy matter in the process of exports deflection. The main findings are as follows: (i) two thirds of the value of Iranian non-oil exports thought to be destroyed by exports sanctions have actually been de?ected to destinations not imposing sanctions; (ii) exporters reduced their product prices as they deflected exports to new destinations; (iii) exporters deflected more of their core and homogeneous products; (iv) larger exporters deflected more of their exports than smaller exporters; (v) the new destinations are more politically-friendly with Iran; and (vi) the probability of an exporter to deflect exports to another destination rised if the exporter already existed in that destination, suggesting that cost of exporting matters too. I conclude that exports sanctions may be less effective in a globalized world as exporters can deflect their exports from one export destination to another.

Suggested Citation

  • Jamal Ibrahim Haidar, "undated". "Sanctions and Exports Deflection: Evidence from Iran," Working Paper 316051, Harvard University OpenScholar.
  • Handle: RePEc:qsh:wpaper:316051

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    Cited by:

    1. Draca, Mirko & Garred, Jason & Stickland, Leanne & Warrinnier, Nele, 2018. "On Target? The Incidence of Sanctions Across Listed Firms in Iran," CAGE Online Working Paper Series 372, Competitive Advantage in the Global Economy (CAGE).
    2. Tibor Besedeš & Stefan Goldbach & Volker Nitsch, 2017. "You’re banned! The effect of sanctions on German cross-border financial flows," Economic Policy, CEPR;CES;MSH, vol. 32(90), pages 263-318.
    3. Efing, Matthias & Goldbach, Stefan & Nitsch, Volker, 2018. "Freeze! Financial sanctions and bank responses," Discussion Papers 45/2018, Deutsche Bundesbank.
    4. Jonas Frank, 2017. "The empirical consequences of trade sanctions for directly and indirectly affected countries," FIW Working Paper series 174, FIW.
    5. Efing, Matthias & Goldbach, Stefan & Nitsch, Volker, 2018. "Freeze! Financial sanctions and bank responses," Discussion Papers 45/2018, Deutsche Bundesbank.
    6. Peeva, Aleksandra, 2019. "Did sanctions help Putin?," Discussion Papers 2019/7, Free University Berlin, School of Business & Economics.
    7. Sanati, Youssef, 2019. "Der Wirtschaftsstandort Iran zwischen Förderung und Sanktion: Eine ARDL-modellbasierte Analyse ausländischer Investitionen," Arbeitspapiere 186, University of Münster, Institute for Cooperatives.
    8. Lorenzo Rotunno & Pierre-Louis Vézina, 2017. "Israel’s open-secret trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 153(2), pages 233-248, May.
    9. Matthieu Crozet & Julian Hinz, 2016. "Collateral Damage: The impact of the Russia sanctions on sanctioning countries’ exports," Working Papers 2016-16, CEPII research center.
    10. Wang, Yiwei & Wang, Ke & Chang, Chun-Ping, 2019. "The impacts of economic sanctions on exchange rate volatility," Economic Modelling, Elsevier, vol. 82(C), pages 58-65.
    11. Gabriel J. Felbermayr & Constantinos Syropoulos & Erdal Yalcin & Yoto V. Yotov, 2019. "On the Effects of Sanctions on Trade and Welfare: New Evidence Based on Structural Gravity and a New Database," CESifo Working Paper Series 7728, CESifo.
    12. 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, Open Access Journal, vol. 4(4), pages 1-15, October.
    13. Gern, Klaus-Jürgen & Hauber, Philipp & Kooths, Stefan & Stolzenburg, Ulrich, 2017. "Weltkonjunktur im Winter 2017 - Weltwirtschaft weiter im Aufschwung
      [World Economy Winter 2017 - World economic upswing continues]
      ," Kieler Konjunkturberichte 37, Kiel Institute for the World Economy (IfW).
    14. Hinz, Julian, 2017. "The cost of sanctions: Estimating lost trade with gravity," Kiel Working Papers 2093, Kiel Institute for the World Economy (IfW).
    15. Hinz, Julian, 2017. "Friendly fire: Zu den Handelsauswirkungen der Russlandsanktionen," IfW-Box 2017.17, Kiel Institute for the World Economy (IfW).
    16. Oliver Fritz & Elisabeth Christen & Franz Sinabell & Julian Hinz, 2017. "Russia's and the EU's Sanctions. Economic and Trade Effects, Compliance and the Way Forward," WIFO Studies, WIFO, number 60669.
    17. Frank, Jonas, 2018. "The effects of economic sanctions on trade: New evidence from a panel PPML gravity approach," Hohenheim Discussion Papers in Business, Economics and Social Sciences 17-2018, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    18. Crozet, Matthieu & Hinz, Julian, 2016. "Friendly fire - the trade impact of the Russia sanctions and counter-sanctions," Kiel Working Papers 2059, Kiel Institute for the World Economy (IfW).
    19. Gullstrand, Joakim, 2018. "What Goes Around Comes Around: The Effects of Sanctions on Swedish Firms in the Wake of the Ukraine Crisis," Working Papers 2018:28, Lund University, Department of Economics.

    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F5 - International Economics - - International Relations, National Security, and International Political Economy
    • F6 - International Economics - - Economic Impacts of Globalization

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