The Impact of Economic Sanctions on Iran

This paper examines the direct impact of economic sanctions on Iran's non-oil trade for the purpose of demonstrating whether or not these sanctions have been effective. A modified "gravity model" of bilateral trade flows is utilized which adjusted specific variables to more precisely portray Iran's unique economic situation. The panel analysis incorporates available data, covering the period from 1977 to 2006, drawn from sampling of 42 trading partners of Iran. In order to test the effect of sanctions, this study uses both the extensive and moderate sanctions as two dummy variables influencing the slope coefficient. The result shows that the extensive and moderate embargoes have had significant impacts on Iran's non-oil trade so far. In conclusion; economically, this article categorizes the multilateral boycotts, holding all other factors constant, as an ultimately successful initiative.