Investigating the effect of foreign sanctions on the level of foreign payments of the Islamic Republic of Iran: The approach of dynamic systems

Document Type : Research Paper


department of economic,management&economic faculty,shahid bahounar university of kerman,kerman,iran


Since the victory of the Islamic Revolution in Iran, the United States, the European Union, and the United Nations Security Council have imposed a wide range of sanctions on the Islamic Republic of Iran. These sanctions, for political and economic purposes, have affected various areas. One of the main areas affected by these sanctions is the external balance of payments. The purpose of this article is to study the effects and consequences of economic sanctions on the balance of foreign payments in Iran. In order to make a comprehensive study about this goal, the foreign trade model of the Islamic Republic of Iran was simulated using the dynamic systems approach. In addition, in order to quantify the economic effects of sanctions, the opinions of 15 economics experts on sanctions were collected in the form of fuzzy questionnaires and using the fuzzy logic method, the sanctions index variable was obtained. The period of this research is 1979-2017. By imposing economic sanctions on the foreign trade model in the form of 4 scenarios, different dimensions of economic sanctions were examined. The results show that the sanctions imposed on the Islamic Republic of Iran through the export channel have posed the greatest risks to the foreign balance of the Islamic Republic of Iran. Accordingly, serious attention to the development of exports in Iran is an important principle to reduce the risks of economic sanctions. In addition, the economic consequences of sanctions can be reduced by using trade agreements and selecting strategic partners among the countries in the region.


Main Subjects

  1. Aghaei, M., & Reza Gholizadeh, M., & Mohammad Rezaei, M. (2018). Investigating the Impact of Economic and Trade Sanctions on Trade Relations between Iran and Major Trade Partner Countries. Quarterly Journal of Strategic Studies in Public Policy, 8(28), 49-68 (In Persian).
  2. Aghili, F., & Taybi, K., & Azarbayjani, K. (2019). Evaluation of Hexcher-Ohlin-Vanek theory in expanding Iran's trade relations with a range of business partners. Economic Research, 2(54), 321-344 (In Persian).
  3. Asgharpour, H., & Jame Shuranov, Z. (2015). Analysis of the effect of monetary approach on balance of payments in Iran. Development Economics and Planning, 1(4), 67-81 (In Persian).
  4. Azarbayjani, K., & Taybi, S. K. & Safa Dargiri, H. (2015). The effect of US and EU economic sanctions on Iran's bilateral trade and its trading partners Application of the model of gravity. Economic Research, 3(50), 539-562 (In Persian).
  5. Ankudinov, A., Ibragimov, R., & Lebedev, O. (2017). Sanctions and the Russian stock market. Research in International Business and Finance, 40, 150-162.
  6. Branson, W. H. (2008). Macroeconomic theory and policies. Translated by Abbas Shakeri, Tehran, Ney Publishing (In Persian).
  7. Bustani, M., & Mousavi, F., & Karami, H., & Farzin, S. (2018). Analysis of river parentheses using indicators based on turbulence theory, Iranian Water Resources Research, 4(14), 276-280 (In Persian).
  8. Diamond, J. S. (2019). Ganglion cells in primate retina use fuzzy logic to encode complex visual receptive fields. Neuron, 103(4), 549-551.
  9. Eyler, R. (2007). Economic sanctions: international policy and political economy at work. Springer.

10. Felbermayr, G., Syropoulos, C., Yalcin, E., & Yotov, Y. V. (2020). On the Heterogeneous E ects of Sanctions on Trade and Welfare: Evidence from the Sanctions on Iran and a New Database.

11. Frank, J. (2017). The empirical consequences of trade sanctions for directly and indirectly affected countries (No. 174). FIW Working Paper.

12. Gurvich, E., & Prilepskiy, I. (2016). The impact of financial sanctions on the Russian economy. Voprosy economiki, 1.

13. Hufbauer, G., Jeffrey, S., Kimberly, E., & Barbara, O. (2007). Economic Sanction s Reconsidered, (3rdedn.) Peterson Institute for International Economics. Washington DC.

14. Katzman, K. (2015). Iran, gulf security, and US policy. Congressional Research Service.

15. Korhonen, I., Simola, H., & Solanko, L. (2018). Sanctions, counter-sanctions and Russia: Effects on economy, trade and finance.

16. Kamali, N., Delavari, M., & Esfandiari, A. A. (2015). Analysis of the Impact of Balance of Payments on Foreign Exchange Market Developments: A Case Study of Iran. Financial Knowledge of Securities Analysis, 8(25), 81-100 (In Persian).

17. Kazeruni, S. A., & Khezri, E. (2016). Investigating the effect of economic sanctions on the import of capital, intermediary and consumer goods in Iran during the period 1360-1392. Journal of Parliament and Strategy, 25(93), 293-420 (In Persian).

18. Kazeruni, S. A., Asgharpour, H., & Khezri, E. (2015). Investigating the effect of economic sanctions on the composition of Iran's major trading partners during the period 1371-1392. Quarterly Journal of Business Research, 79, 1-33 (In Persian).

19. Kraváček, T. (2020). The Impact of International Sanctions on The Economy of Iran.

20. Lamotte, O. (2012). Disentangling the impact of wars and sanctions on international trade: evidence from former Yugoslavia. Comparative Economic Studies, 54(3), 553-579.

21. Mahdiloo, A., Aboihasani Histani, A., & Rezaei, M. (2019). Ranking of Economic Sanctions and Estimating Hazard of Sanctions Index Using Fuzzy Analytical Hierarchy Process. Applied Theories of Economics, 2(6), 47-72 (In Persian).

22. Mahdiloo, A., Sadeghi, H., & Assari, A. (2014). Estimation Non-Linearity Effect of Rent Seeking Opportunities on Volume of Private Sector Bank Deposits in Iranian Economy: Using Markov-Switching Model. Applied Economics Studies in Iran, 4, 265-294 (In Persian).

23. Masfaei Dolatabad, Kh., Azar, A., Moqbeloobarz, A., & Parvizian, K. (2019). Evaluate the mining process in discovering the model of semi-automatic processes in the banking industry. Journal of Industrial Management Studies, 17(52), 1-37 (In Persian).

24. Mahmoudi, N., Hosseinpour, A., & Rezaei, M. (2019). Productivity analysis of total factors of production in selected sectors despite the economic sanctions index. Economic Research, 3(54), 659-693 (In Persian).

25. Mashayekhi, A. N. (1991). The impact of exchange rate policy on inflation rate in an oil‐exporting economy. System Dynamics Review, 7(2), 117-144.

26. Moret, E. S. (2015). Humanitarian impacts of economic sanctions on Iran and Syria. European Security, 24(1), 120-140.

27. Rahbar, F., & Mirshajaeian Hosseini, H. (2009). The science of fuzzy management. Tehran, Mehraban (In Persian).

28. Rahmani, T. (2007). Macroeconomics 2, Tehran, Payame Noor University (In Persian).

29. Shakeri, A. (1999). Macroeconomics: Theories and Policies, Volume 1, Tehran, Navisa Publications (In Persian).

30. Salvatore, D. (2009). International Trade, translated by Hamid Reza Arbab, Tehran, Ney Publishing (In Persian).

31. Vanek, J. (1968). The factor proportions theory: The n—factor case. Kyklos, 21(4), 749-756.