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.