The Impact of Economic Sanctions on Iran's Export: Using the Synthetic Control Method

Document Type : Research Article


1 PhD Student, Department of Economics, Payam-e-Noor University, Tehran, Iran.

2 Associate Professor, Department of Economics, Payam-e-Noor University, Tehran, Iran

3 Assistant Professor, Department of Economics, Payam-e-Noor University, Tehran, Iran


This study employs the Synthetic Control Method (SCM) as an innovative method in evaluating the effects of a policy to assess the effect of the 2011 economic sanctions on Iran's exports during the period 2001-2018. For this purpose, in addition to Iran, ten other countries have been considered as a donor pool to simulate the trend of Iran's exports before and after the economic sanctions. New Zealand, Turkey, the UAE and China have played the most important roles in this simulation. The results show that while Iran could have achieved more than $ 150 billion in exports for each of the years since the embargo, the sanctions have caused Iran to lose an average of $ 74 billion export income annually. According to the estimated model, the largest export gap is related to 2015, when sanctions caused Iran's export to reach $ 60 billion. While according to the counterfactual export pattern and in the absence of sanctions in this year, the amount of exports could reached $159.7 billion, and the maximum export gap has been recorded $99.7 billion. The placebo test confirms the reliability of the estimates made by extending the SCM to all members of the donor pool. The results of this study show that Iran's export is affected by demand side factors. Developing friendly political relations with business partners, avoiding international disputes, and building sustainable trade relations through business links between firms are among the policy recommendations.


Main Subjects

عادلی، عبدالحمید؛ غفاری، هادی؛ و شایگانی، بیتا، (1399). «واکاوی اثرگذاری محدودیت‌های صادراتی بر ساختار صادرات غیرنفتی ایران با تأکید بر بخش معدنی». فصلنامۀ مطالعات اقتصادی کاربردی ایران، شمارۀ 9(34)، صص: 163-189. doi: 10.22084/aes.2020.21558.3053.
عزتی، مرتضی؛ و سلمانی، یونس، (1394). «برآورد اثر تحریم‌های اقتصادی بر رشد اقتصادی ایران». مطالعات راهبردی بسیج، شمارۀ 18(66)، صص: 69-101.
عزتی، مرتضی؛ حیدری، حسن؛ و مریدی، پروین، (۱۳۹۸). «برآورد تأثیر تحریم‌های اقتصادی بر تولید و اشتغال بخش کشاورزی». مجلۀ پژوهش‌ها و سیاست‌های اقتصادی، سال 27، شمارۀ 91، صص: 289-322.
گرشاسبی، علیرضا؛ و یوسفی، مجتبی، (۱۳۹۵). «بررسی اثرات تحریم بین‌المللی بر متغیرهای کلان اقتصادی ایران». فصلنامۀ تحقیقات مدل‌سازی اقتصادی، شمارۀ ۷ (۲۵)، صص: ۱۲۹-۱۸۲.
مهدی‌لو، علی؛ ابوالحسنی، اصغر؛ و رضایی، محسن، (۱۳۹۸). «رتبه‌بندی انواع تحریم‌های اقتصادی و برآورد شاخص مخاطرات تحریم با استفاده از روش تحلیل سلسله‌مراتبی فازی». مجلۀ نظریه‌های کاربردی اقتصاد، سال 6، شمارۀ ۲، صص: 49-76.
Abadie, A. & Gardeazabal, J., (2003). “The economic costs of conflict: A case study of the Basque Country”. American Economic Review, No. 93 (1), Pp: 113-132.
Abadie, A.; Diamond, A. & Hainmueller, J., (2010). “Synthetic control methods for comparative case studies: Estimating the effect of California's tobacco control program”. Journal of the American Statistical Association, No. 105 (490), Pp: 493-505.
Abadie, A.; Diamond, A. & Hainmueller, J., (2015). “Comparative politics and the synthetic control method”. American Journal of Political Science, No. 59 (2), Pp: 495-510.
Afesorgbor, S. K. & Mahadevan, R., (2016). The Impact of Economic Sanctions on Income Inequality of Target States. AARHUS BSS.
Allegretto, & Gdoy, A., (2017). Seattle's minimum wage experience 2015-16. CWED policy brief, Center on wage and employment dynamics, UC Berkeley.
Allegretto, S.; Dube, A.; Reich, M. & Zipperer, B., (2017). “Credible research designs for minimum wage studies: A response to Neumark, Salas, and Wascher”. ILR Review, No. 70, Pp: 559-592.
Athey, S. & Imbens, G. W., (2017). “The state of applied econometrics: Causality and policy evaluation”. The Journal of Economic Perspectives, No. 31, Pp: 23-32.
Bigdeli, M. Z.; Gholami, E. & Boldaji, F. T., (2013). “The Effect of Sanctio on Iran’s Trade: An Application of the Gravity Model”. Pajhooheshname Eghtesadi, No. 13(48), Pp: 109-119.
Bohn, S.; Lofstrom, M. & Raphael, S., (2014). “Did the 2007 Legal Arizona Workers Act reduce the state's unauthorized immigrant population?”. Review of Economics and Statistics, No. 96 (2), Pp: 258-269
Clyde, G.; Hufbauer, G. & Oegg, B., (2003). “The impact of Economic Sanctions on US Trade: Andrew Rose's Gravity Model”. International Economics Policy Briefs, No. PB03-4.
Collier, D., (1993). “The Comparative Method”. In: Political Science: The State of the Discipline II, ed. Ada W. Finifter. Washington, DC: American Political Science Association, Pp: 105–19.
Cunningham, S. & Shah, M., (2018). “Decriminalizing indoor prostitution: Implications for sexual violence and public health”. The Review of Economic Studies, No. 85 (3), Pp: 1683-1715.
Davis, L. & Engerman, S., (2003). “History Lessons. Sanctions: Neither War nor Peace”. Journal of Economic Perspectives, No. 17(2), Pp: 187-197.
Donohue, J. J.; Aneja, A. & Weber, K. D., (2019). “Right-to-carry laws and violent crime: A comprehensive assessment using panel data and a state-level synthetic control analysis”. Journal of Empirical Legal Studies, No. 16 (2), Pp: 198-247.
Drezner, D. W., (2003). Review: How Smart Are Smart Sanctions? JSTOR, 5.
Dube, A. & Zipperer, B., (2015). “Pooling multiple case studies using synthetic controls: An application to minimum wage policies”. IZA Discussion Papers 8944, Institute for the Study of Labor (IZA)Evidence from the European football market. American Economic Review, No. 103 (5), Pp: 1892-1924
Ferrand, B., (2004). “Quels fondements juridiques aux embargos et blocus aux confins des XXe et XXIe siècles”. P.U.F., No. 214(2), Pp: 55-79.
George, A. L. & Andrew, B., (2005). Case Studiesand Theory Development in the Social Sciences. Cambridge MA: MIT Press.
Gerring, J., (2007). Case Study Research: Principles and Practices. Cambridge: Cambridge University Press.
Gharehgozli, O., (2017). An estimation of the economic cost of recent sanctions on Iran using the synthetic control method. Economics Letters.
Gilligan, E., (2016). “Smart Sanctions against Russia: Human Rights, Magnitsky and the Ukrainian Crisis”. Demokratizatsiya: The Journal of Post-Soviet Democratization, No. 24(2), Pp: 257-277.
Gottemoeller, R., (2007). “The Evolution of Sanctions in Practice and Theory”. Survival, No. 49(4), Pp: 99-110
Guo, J., (2015). Seriously, here's one amazing math trick to learn what can't be known. Wonkblog, The Washington Post, October 30.
Haidar, J. I., (2017), “Sanctions and Export Deflection: Evidence from Iran". Economic Policy (CEPR), No. 32 (90), Pp: 319-355.
Hannan, S., (2017). The Impact of Trade Agreements in Latin America using the Synthetic Control Method. IMF Working Paper, WP/17/45.
Hausmann, R.; Hwang, J. & Rodrik, D., (2006). What You Export Matters. CEPR Discussion   Papers 5444.
Heersink, B.; Peterson, B. D. & Jenkins, J. A., (2017). “Disasters and elections: Estimating the net effect of damage and relief in historical perspective”. Political Analysis, No. 25, Pp: 260-268
Hufbauer, G. C.; Schott, J. J.; Elliott, K. A. & Oegg, B., (2007). Economic sanctions reconsidered (3rd ed.). Washington, DC: Peterson Institute for International Economics.
Jardim, E.; Long, M. C.; Plotnick, R.; Inwegen, E. V.; Vigdor, J. & Wething, H., (2017). Minimumwage increases, wages, and low-wage employment: Evidence from Seattle. National Bureau ofEconomic Research.
Kaempfer, W. H. & Anton D. L., (2007). “The Political Economy of Economic Sanctions”. In: Handbook of Defense Economics, Volume 2: Defense in a Globalized World, edited by T. Sandler and K. Hartley. Amsterdam: Elsevier, Pp: 867–911.
Kholodilin, K. & NetŠunajev, A., (2016). “Crimea and Punishment: The Impact of Sanctions on Russian and European Economies”. Deutsches Institut für Wirtschaftsforschung DISCUSSION PAPERS, No. 1569.
Kim, J., (2010). “Recent Trends in Export Restrictions”. OECD Trade Policy Papers, N°101, OECD Publishing, Paris,
Kleven, H. J.; Landais, C. & Saez, E., (2013). “Taxation and international migration of superstars: Evidence from the European football market”. American Economic Review, No. 103 (5), Pp: 1892-1924.
Lijphart, A., (1971). “Comparative Politics and the Comparative Method”. American Political Science Review, No. 65 (3), Pp: 682–93.
Neumark, D. & Wascher, W., (2017). “Reply to Credible research designs for minimum wage studies”. ILR Review, No. 70, Pp: 593-609.
Peri, G. & Yasenov, V., (2019). “The labor market effects of a refugee wave: Synthetic control method meets the Mariel boatlift”. Journal of Human Resources, No. 54 (2), Pp: 267-309.
Pieters, H.; Curzi, D.; Olper, A. & Swinnen, J., (2017). “Effect of democratic reforms on child mortality: A synthetic control analysis”. The Lancet Global Health, No. 4, Pp: e627-e632.
Pinotti, P., (2015). “The economic costs of organised crime: Evidence from Southern Italy”. Economic Journal, No. 125, Pp: F203-F232.
Borjas, G. J., (2017). “The wage impact of the Marielitos: A reappraisal”. ILR Review, No. 70, Pp: 1077-1110.
Shirazi, H.; Azarbaiejani, K. & Sameti, M., (2016). “The Effect of Economic Sanctions on Iran's Export”. Iranian Economic Review, No. 20(1), Pp: 111-124. doi: 10.22059/ier.2016.58273
Zoller, E., (1984). Peacetime Unilateral Remedies: An Analysis of Contermeasures (Dobbs Ferry, NY: Transnational Publishers).
Adeli, A.; Ghafari, H. & Shaygani, B., (2020). “The Impact of Export Restrictions on Iran's Non-oil Export with an Emphasis on Mining Sector”. Journal of Applied Economics Studies in Iran, No. 9(34), Pp: 163-189, (In Persian).
Ezati, M. & Salmani, Y., (2015). “The Impacts of Economic Sanctions on Iran’ S Economic Growth”. Basij Strategic Research Quarterly, No. 18(67), Pp: 69-101, (In Persian).
Ezzati, M.; Heidari, H. & Moridi, P., (2019). “Estimation of Economic Sanctions Effects on Employment of Agricultural Production”. Journal of Economic Research and Policies, No. 27 (91), Pp: 289-322, (In Persian).
Garshasbi, A. & Yusefi M., (2016). “Assessment of International Sanctions on Iranian Macroeconomic Variables”. Journal of Economic Modeling Research, No. 7 (25), Pp:129-182, (In Persian).
Mahdiloo, A.; Abolhasani, A. & Rezaei, M., (2019). “Ranking of Economic Sanctions and Estimating Hazard of Sanctions Index Using Fuzzy Analytical Hierarchy Process”. Journal of Applied Theories of Economics, No. 6(2), Pp: 47-72, (In Persian).