The impact of economic sanctions on the efficiency of bilateral energy exports: the case of Iran

Economic sanctions can be a serious impediment to economic progress, since the export potential of target countries may be adversely affected by the sanctions. Due to the detrimental impacts on the exports of energy products and accordingly its efficiency, in this study, we sought to evaluate the impact of economic sanctions on the export efficiency of energy products of Iran. To fulfill the aim, the determinants of the bilateral exports of energy products from Iran to its ten major energy products’ customers are identified using a generalized gravity model and the least-squares dummy variable (LSDV) estimator by adding the dummy for each country from 1997 to 2018 to determine input vectors required for calculating the efficiency changes of the energy products’ exports. After identifying the determinants, the Malmquist index is employed to calculate the efficiency changes of bilateral energy exports from 1998 to 2018. Finally, the efficiency changes are analyzed to evaluate the relationship between economic sanctions and the efficiency of bilateral energy exports. Based on the results, an increase in the GDP and CPI of Iran’s partners boosts the bilateral energy exports, whereas the effects of Iran’s GDP, the geographical distance between Iran and its partners, and sanctions on the bilateral energy exports have been negative. The values of the efficiency changes have also decreased in the years in which economic sanctions imposed on Iran. Because energy exports serve a prominent role in Iran’s economy, the government should try to reach international agreements to remove sanctions.