The Economic Sanctions Channel for The Curse of The Petro-State of Iran: Evidence from the Synthetic Control Method
Abstract
This study estimates the impact of economic sanctions on oil exports and economic growth in the case study of Iran. By creating a synthetic control group method that reproduces the oil exports and economic growth before economic sanctions are imposed in the case of Iran, we compare the oil exports as well as the economic growth of the Synthetic and the actual for each period. Using the synthetic control method, we fill a major gap in the sanctioned literature in the petrostate economies case study. Our study finds that both oil exports and the economic growth of Iran would have been lower had it not been exposed to economic sanctions. This research is embedded in the comparative and international landscape linked to the relations of international influences with the domestic economy. The findings explain that economic sanctions are a leading factor in the variations in oil exports and economic growth, which can be reflected in the oil curse. We claim that our empirical investigation can contribute to policy formulation in the domestic and foreign arena by sanctioned countries. Overall, the findings confirm that the imposition of sanctions on a petrostate economy like (Iran) can be operated as another channel of the resource curse from international and foreign policy perspectives.
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References
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Neuenkirch, M., & Neumeier, F. 2015. The impact of UN and US economic sanctions on GDP growth. European Journal of Political Economy, 40, 110-125.
Peksen, D., & Drury, A. C. 2010. Coercive or corrosive: The negative impact of economic sanctions on democracy. International Interactions, 36(3), 240-264.
Pesaran, M. H. 2006. Estimation and inference in large heterogeneous panels with a multifactor error structure. Econometrica, 74(4), 967-1012.
Pond, A. 2017. Economic sanctions and demand for protection. Journal of Conflict Resolution, 61(5), 1073-1094.
Rodríguez, F. 2019. Sanctions and the Venezuelan economy: What the data say. Latam Economics Viewpoints.
Ross. 2013. The oil curse: How petroleum wealth shapes the development of nations: Princeton University Press.
Ross, M. L., & Voeten, E. 2011. Unbalanced Globalization in the Oil Exporting States. Paper presented at the annual meetings of the American Political Science Association, Seattle, September.
Shin, G., Choi, S.-W., & Luo, S. 2016. Do economic sanctions impair target economies? International Political Science Review, 37(4), 485-499.
Shirazi, H., Azarbaiejani, K., & Sameti, M. 2016. The Effect of Economic Sanctions on Iran's Exports. Iranian Economic Review, 20(1).
Smith, B. 2015. The resource curse exorcised: Evidence from a panel of countries. Journal of Development Economics, 116, 57-73.
Wen, J., Zhao, X., Wang, Q.-J., & Chang, C.-P. 2020. The impact of international sanctions on energy security. Energy & Environment, 0958305X20937686.
Yang, J., Askari, H., Forrer, J., & Zhu, L. 2009. How Do US Economic Sanctions Affect EU's Trade with Target Countries? World Economy, 32(8), 1223-1244.
Abadie, A., & Gardeazabal, J. 2003. The economic costs of conflict: A case study of the Basque Country. American economic review, 93(1), 113-132.
Aghazadeh, M. 2013. International Sanctions and Their Impacts on Iran's Economy: Lap Lambert Academic Publishing.
Barseghyan, G. 2019. Sanctions and counter-sanctions: What did they do? (9523233068). Retrieved from
Bellin, E. 2004. The robustness of authoritarianism in the Middle East: Exceptionalism in comparative perspective. Comparative politics, 139-157.
Borszik, O. 2016. International sanctions against Iran and Tehran's responses: political effects on the targeted regime. Contemporary politics, 22(1), 20-39.
Caruso, R. 2003. The impact of international economic sanctions on trade: An empirical analysis. Peace Economics, Peace Science and Public Policy, 9(2).
Caruso, R. 2005. The impact of international economic sanctions on trade empirical evidence over the period 1960-2000. Rivista Internazionale di Scienze Sociali, 41-66.
Colgan. 2010. Oil and revolutionary governments: Fuel for international conflict. International Organization, 64(4), 661-694.
Colgan. 2011. Oil and resource-backed aggression. Energy Policy, 39(3), 1669-1676.
Colgan. 2013. Petro-aggression: When oil causes war: Cambridge University Press.
Colgan. 2014. The emperor has no clothes: The limits of OPEC in the global oil market. International Organization, 68(3), 599-632.
Degli Esposti, M., Spreckelsen, T., Gasparrini, A., Wiebe, D. J., Bonander, C., Yakubovich, A. R., & Humphreys, D. K. 2020. Can synthetic controls improve causal inference in interrupted time series evaluations of public health interventions? International Journal of Epidemiology, 49(6), 2010-2020.
Ebrahimi, M., Jalalian, A., & Esfandyari, L. 2015. The impacts of economic sanctions on human rights in countries of Iran and Iraq. World Scientific News, 16, 12-27.
Felbermayr, G. J., Syropoulos, C., Yalcin, E., & Yotov, Y. 2019. On the effects of sanctions on trade and welfare: New evidence based on structural gravity and a new database.
Frank, J. 2017. The empirical consequences of trade sanctions for directly and indirectly affected countries. Retrieved from
Frankel, J. A. 2012. The natural resource curse: A survey of diagnoses and some prescriptions. HKS Faculty Research Working Paper Series.
Ghahroudi, M. R., & choy Chong, L. 2020. Role of Sanctions and Macroeconomic Determinants on FDI Inflow: A Case Study.
Gharehgozli, O. 2017. An estimation of the economic cost of recent sanctions on Iran using the synthetic control method. Economics Letters, 157, 141-144.
Haidar, J. I. 2014. Sanctions Backfire: Did Exports Deflection Help Iranian Exporters. Mimeograph, Paris School of Economics.
Haidar, J. I. 2017. Sanctions and export deflection: evidence from Iran. Economic Policy, 32(90), 319-355.
Henry, C. M. 2004. Algeria's Agonies: Oil rent effects in a bunker state. The Journal of North African Studies, 9(2), 68-81.
Hufbauer, G. C., Schott, J. J., & Elliott, K. 1990. Economic sanctions reconsidered, institute for International Economics. Washington (1990, 1998).
Hufbauer, G. C., Schott, J. J., & Elliott, K. A. 2008. Economic Sanctions Reconsidered 3rd edition (hardcover+ CD). Peterson Institute Press: All Books.
Ianchovichina, E., Devarajan, S., & Lakatos, C. 2016. Lifting economic sanctions on Iran: global effects and strategic responses: The World Bank.
Jensen, N., & Wantchekon, L. 2004. Resource wealth and political regimes in Africa. Comparative political studies, 37(7), 816-841.
Kamali, T., Mashayekh, M., & Jandaghi, G. 2016. The impact of economic sanctions on corruption in target countries: a cross country study. World Scientific News, 45(2), 276-291.
Karl, T. L. 1997. The paradox of plenty: Oil booms and petro-states (Vol. 26): Univ of California Press.
Karl, T. L. 1999. The perils of the petro-state: reflections on the paradox of plenty. Journal of International Affairs, 31-48.
Katzman, K. (2011. Iran sanctions.
Lam, S. L. 1990. Economic sanctions and the success of foreign policy goals: a critical evaluation. Japan and the World Economy, 2(3), 239-248.
Mirkina, I. 2018. FDI and sanctions: An empirical analysis of short-and long-run effects. European Journal of Political Economy, 54, 198-225.
Neuenkirch, M., & Neumeier, F. 2015. The impact of UN and US economic sanctions on GDP growth. European Journal of Political Economy, 40, 110-125.
Peksen, D., & Drury, A. C. 2010. Coercive or corrosive: The negative impact of economic sanctions on democracy. International Interactions, 36(3), 240-264.
Pesaran, M. H. 2006. Estimation and inference in large heterogeneous panels with a multifactor error structure. Econometrica, 74(4), 967-1012.
Pond, A. 2017. Economic sanctions and demand for protection. Journal of Conflict Resolution, 61(5), 1073-1094.
Rodríguez, F. 2019. Sanctions and the Venezuelan economy: What the data say. Latam Economics Viewpoints.
Ross. 2013. The oil curse: How petroleum wealth shapes the development of nations: Princeton University Press.
Ross, M. L., & Voeten, E. 2011. Unbalanced Globalization in the Oil Exporting States. Paper presented at the annual meetings of the American Political Science Association, Seattle, September.
Shin, G., Choi, S.-W., & Luo, S. 2016. Do economic sanctions impair target economies? International Political Science Review, 37(4), 485-499.
Shirazi, H., Azarbaiejani, K., & Sameti, M. 2016. The Effect of Economic Sanctions on Iran's Exports. Iranian Economic Review, 20(1).
Smith, B. 2015. The resource curse exorcised: Evidence from a panel of countries. Journal of Development Economics, 116, 57-73.
Wen, J., Zhao, X., Wang, Q.-J., & Chang, C.-P. 2020. The impact of international sanctions on energy security. Energy & Environment, 0958305X20937686.
Yang, J., Askari, H., Forrer, J., & Zhu, L. 2009. How Do US Economic Sanctions Affect EU's Trade with Target Countries? World Economy, 32(8), 1223-1244.
Published
2024-08-28
How to Cite
CAHYADIN, malik; ERTIMI, Basem Ertimi; SARMIDI, Tamat Tamat.
The Economic Sanctions Channel for The Curse of The Petro-State of Iran: Evidence from the Synthetic Control Method.
Jurnal Ekonomi Kuantitatif Terapan, [S.l.], v. 17, n. 2, p. 181-200, aug. 2024.
ISSN 2303-0186.
Available at: <https://ojs.unud.ac.id/index.php/jekt/article/view/106287>. Date accessed: 28 oct. 2024.
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Articles
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