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Economies 2016, 4(4), 24; doi:10.3390/economies4040024

Have Sanctions Modified Iran’s Trade Policy? An Evidence of Asianization and De-Europeanization through the Gravity Model

Department of World Economy, Faculty of Economics, Saint Petersburg State University, St. Petersburg 191123, Russia
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Academic Editor: Ralf Fendel
Received: 26 May 2016 / Revised: 16 October 2016 / Accepted: 22 October 2016 / Published: 28 October 2016
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Abstract

This study is an empirical attempt to find out whether under sanctions Iran’s trade direction has shifted away from Europe (trade policy of de-Europeanization) towards Asia (trade policy of Asianization). The analysis is conducted using a panel-gravity trade model to analyze bilateral trade pattern between Iran and 50 countries from the EU and Asia during the period 2006–2013. To this end, the authors use an extended gravity model by adding new variables, including the index of Chinn–Ito (KAOPEN) as an indicator of financial openness, and the composite trade intensity (CTI) as an indicator of trade openness. Our findings reveal that the gravity equation fits the data reasonably well. The empirical evidence indicates a significant negative effect of sanctions on Iran–EU bilateral trade (by an average of 46.9%), while it has a positive impact on trade between Iran and the Asian countries (by an average of 85.2%). Overall, these findings confirm that the imposition of various sanctions related to Iran’s nuclear program has pushed the country’s foreign trade to reorient away from Europe towards Asia. View Full-Text
Keywords: sanctions; trade policy; gravity model; Iran sanctions; trade policy; gravity model; Iran
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Popova, L.; Rasoulinezhad, E. Have Sanctions Modified Iran’s Trade Policy? An Evidence of Asianization and De-Europeanization through the Gravity Model. Economies 2016, 4, 24.

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