The Sanctions and Geographical Shift in Trading Partners: Evidence from Iran and Russia through a Gravity Model

Author

Faculty of World Studies, University of Tehran, Tehran, Iran

Abstract

T





his paper is an attempt investigating the relationship between sanctions implications and geographical shift in trading partners. To this end, we analyze separately foreign trade patterns of two countries namely Iran and Russia - which are under imposed sanctions experience - with two United Nations Regional Groups (The Asia-Pacific and the Western European groups)  using a gravity model. The gravity models are estimated over two different time periods: (i) 2006-2015 for Iran and (ii) 2008-2016 for Russia. The main results provide evidence supporting the Asianization and de-Europeanization of Iran and Russia under sanctions which proves the hypothesis of a geographical shift in trading partners under imposing sanctions. However, sanctions have stronger impacts on modifications of Iran’s foreign trade rather than Russian shift in trading partners.
 

Keywords

References

Anderson, J. E., & Wincoop, E. V. (2003). Gravity with Gravitas: A Solution to the Border Puzzle. The American Economic Review, 93(1), 170-192.
Ankudinov, A., Ibragimov, R., & Lebedev, O. (2017). Sanctions and the Russian Stock Market. Research in International Business and Finance. 40, 150-162.
Borszik, O. (2016). International Sanctions Against Iran and Tehran’s Responses: Political Effects on the Targeted Regime. Contemporary Politics. 22(1), 20-39.
CEPII. (2015). GeoDist database. Retrieved from http://www.cepii.fr
Faraji Dizaji, S. (2014). The Effects of Oil Shocks on Government Expenditures and Government Revenues Nexus (With an Application to Iran’s Sanctions). Economic Modelling. 40, 299-313.
Gharehgozli, O. (2017). An Estimation of the Economic Cost of Recent Sanctions on Iran Using the Synthetic Control Method. Economics Letters. 157, 141-144.
Gurvich, E., & Prilepskiy, I. (2015). The Impact of Financial Sanctions on the Russian Economy. Russian Journal of Economics. 1 (4), 359-385.
Guttmann, S., & Richards, A. (2004). Trade Openness: An Australian Perspective. Reserve Bank of Australia, Research Discussion Paper, 2004-11, Retrieved from
http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.391.8054&rep=rep1&type=pdf.
IMF. (2015). The World Economic Outlook Database. Retrieved from http://www.imf.org/en/Data.
IRICA. (2015). Trade data. Retrieved from http://www.irica.gov.ir
Jabalameli, F., & Rasoulinezhad, E. (2018). BRICS-United Nations Regional Groups’ Trade Patterns: a Panel-gravity Approach. Journal of Chinese Economic and Foreign Trade Studies, 11(2), 151-179.
---------- (2012). Iran Solutions against the Economic Sanctions: Analytic Hierarchy Process Approach. American Journal of Business and Management, 1(1), 23-29.
Klinova, M., & Sidorova, E. (2016). Economic Sanctions and Their Impact on Russian Economic Relations with the European Union. Problems of Economic Transition. 58(3), 218-234.
Kaempfer, W. H., & Lowenberg, A. D. (1999). Unilateral Versus Multilateral International Sanctions: A Public Choice Perspective. International Studies Quarterly, 43, 37-58.
---------- (1992). International Economic Sanctions: A Public Choice Perspective. New York: Westview Press, Boulder Co.
Linnemann, H. (1966). An Econometric Study of International Trade Flows. Amsterdam: North-Holland Pu Co.
Majidi, A., Nedjat, S., Mohammadi, A., Jamshidi, E., & Majdzadeh, R. (2014). Impact of Sanctions on Iranian Airlines: How People in Iran Feel about Air Travel Safety? International Journal of Disaster Risk Reduction, 10(A), 67-74.
Moret, E. S. (2015). Humanitarian Impacts of Economic Sanctions on Iran and Syria. European Security, 24(1), 120-140.
Narayan, S., & Nguyen, T.(2016). Does the Trade Gravity Model Depend on Trading Partners? Some Evidence from Vietnam and her 54 Trading Partners. International Review of Economics and Finance, 41, 220-237.
Nasre Esfahani, M., & Rasoulinezhad, E. (2017). Iran’s Trade Policy of Asianization and de-Europeanization under Sanctions. Journal of Economic Studies, 44(4), 552-567.
Nguyen, B. X. (2010). The Determinants of Vietnamese Export Flows Static and Dynamic Panel Gravity Approach. International Journal of Economics and Finance, 24(2), 122-129.
Pesaran, M. H. (2007). A Simple Panel Unit Root Test in the Presence of Cross-Section Dependence. Journal of Applied Econometrics, 22(2), 265-312.
Pfaffermayr, M. (1994). Foreign Direct Investment and Exports: A Time Series Approach. Applied Economics, 26(4), 337-351.
Popova, L., Jabalameli, F., & Rasoulinezhad, E. (2017). Oil Price Shocks and Russia’s Economic Growth: The Impacts and Policies for Overcoming Them. Journal of World Sociological Studies, 1(1), 1-31.
Popova, L., & Rasoulinezhad, E. (2016). Have Sanctions Modified Iran’s trade policy? An Evidence of Asianization and De-Europeanization through the Gravity Model. Economies, 4(4),1-15.
Rasoulinezhad, E. (2019). Analyzing Energy Export Patterns from the Commonwealth of Independent States to China: New Evidence from Gravity Trade Theory. The Chinese Economy, 52(3), 279-294.
---------- (2017). Iran's Trade Modification Under Sanctions: An Evidence of Trade Divergence and Trade Convergence Through the Gravity Model. Journal of Economic Cooperation & Development. 38(4), 25-56.
---------- (2016). Investigation of Sanctions and Oil Price Effects on the Iran-Russia Trade by Using the Gravity Model. Vestnik of St. Petersburg University, series 5 (Economics), 2, 68-84.
Rasoulinezhad, E., & Popova, L. (2017). An Estimation of the Impact of Economic Sanctions and Oil Price Shocks on Iran-Russian Trade: Evidence from a Gravity-VEC Approach. Iranian Economic Review, 21(3), 469-497.
Rasoulinezhad, E., & Jabalameli, F. (2018). Do BRICS countries have similar trade integration patterns? Journal of Economic Integration, 33(1), 1011-1045.
Rasoulinezhad, E., & Seong Kang, G. (2016). A Panel Data Analysis of South Korea’s Trade with OPEC Meer countries: The Gravity Model Approach. Iranian Economic Review, 20(2), 203-224.
Rasoulinezhad, E., & Wei, W. (2017). China’s Trade with OPEC Member Countries: A Panel-Gravity Model Approach. The Chinese Economy, 50(5), 339-355.
Salehi, M., Karimzadeh, M., & Paydarmanesh, N. (2017). The Impact of Iran Central Bank’s Sanction on the Tehran Stock Exchange. International Journal of Law and Management, 59(3), 365-375.
Shirazi, H., Azerbaiejani, K., & Sameti, M. (2016). The Effect of Economic Sanctions on Iran’s Export. Iranian Economic Review, 20(1), 111-124.
Taghizadeh-Hesary, F., Yoshino, N., & Rasoulinezhad, E. (2017). Impact of the Fukushima Nuclear Disaster on the Oil-consuming Sectors of Japan. Journal of Comparative Asian Development, 16(2), 113-134.
Taghizadeh-Hesary, F., Rasoulinezhad, E., & Kobayashi, Y. (2017). Oil Price Fluctuations and Oil Consuming Sectors: An Empirical Analysis of Japan. Economics and Policy of Energy and the Environment, 19, 33-51.
Tuzova, Y., & Qayum, F. (2016). Global Oil Glut and Sanctions: The Impact on Putin’s Russia. Energy Policy, 90, 140-151.
Veebel, V., & Markus, R. (2016). At the Daw of a New Era of Sanctions: Russian-Ukrainian Crisis and Sanctions. Orbis, 60(1), 128-139.
World Bank. (2015). World Development Indicators. Retrieved from http://data.worldbank.org.
 
Iranian Economic Review
Volume 23, Issue 3
July 2019
Pages 593-610

Files

Share

How to cite

Statistics