IDEAS home Printed from https://ideas.repec.org/a/pal/compes/v63y2021i1d10.1057_s41294-020-00136-x.html
   My bibliography  Save this article

Political Agreements and Exporting Activities: An Empirical Assessment of the Effects of the JCPOA Agreement on Iran’s Exports

Author

Listed:
  • Ali Dadpay

    (University of Dallas)

  • Saleh S. Tabrizy

    (The University of Oklahoma)

Abstract

Conflicts hinder international trade. Political agreements that restrain conflicts and remove sanctions may contribute positively to exporting and importing activities. In this study, we examine the effects of the Joint Comprehensive Plan of Action, commonly known as Iran Nuclear Deal, on Iran’s non-oil exports. Employing a dynamic panel model, we find a significant increase in the growth rate of industry-level exports following the removal of nuclear-related sanctions, resulting from this political agreement. In particular, the exports of industries that have relatively low shares in Iran’s non-oil exports grow significantly faster than industries with relatively high shares in those exports. Our findings suggest that even a short-lived political agreement could have significant positive effects on exporting activities in middle-income countries.

Suggested Citation

  • Ali Dadpay & Saleh S. Tabrizy, 2021. "Political Agreements and Exporting Activities: An Empirical Assessment of the Effects of the JCPOA Agreement on Iran’s Exports," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 63(1), pages 147-180, March.
    • Handle: RePEc:pal:compes:v:63:y:2021:i:1:d:10.1057_s41294-020-00136-x
    DOI: 10.1057/s41294-020-00136-x
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1057/s41294-020-00136-x
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1057/s41294-020-00136-x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Amelia Santos-Paulino & A. P. Thirlwall, 2004. "The impact of trade liberalisation on exports, imports and the balance of payments of developing countries," Economic Journal, Royal Economic Society, vol. 114(493), pages 50-72, February.
    2. Qureshi, Mahvash Saeed, 2013. "Trade and thy neighbor's war," Journal of Development Economics, Elsevier, vol. 105(C), pages 178-195.
    3. Philippe Martin & Thierry Mayer & Mathias Thoenig, 2008. "Make Trade Not War?," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 75(3), pages 865-900.
    4. Reuven Glick & Alan M. Taylor, 2010. "Collateral Damage: Trade Disruption and the Economic Impact of War," The Review of Economics and Statistics, MIT Press, vol. 92(1), pages 102-127, February.
    5. A. U. Santos-Paulino, 2002. "Trade Liberalisation and Export Performance in Selected Developing Countries," Journal of Development Studies, Taylor & Francis Journals, vol. 39(1), pages 140-164.
    6. Felbermayr, Gabriel & Syropoulos, Constantinos & Yalcin, Erdal & Yotov, Yoto, 2019. "On the Effects of Sanctions on Trade and Welfare: New Evidence Based on Structural Gravity and a New Database," School of Economics Working Paper Series 2019-3, LeBow College of Business, Drexel University.
    7. Matthieu Crozet & Julian Hinz, 2020. "Friendly fire: the trade impact of the Russia sanctions and counter-sanctions," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 35(101), pages 97-146.
    8. Jamal Ibrahim Haidar, 2017. "Sanctions and export deflection: evidence from Iran," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 32(90), pages 319-355.
    9. Aditya, Anwesha & Acharyya, Rajat, 2015. "Trade liberalization and export diversification," International Review of Economics & Finance, Elsevier, vol. 39(C), pages 390-410.
    10. S. Brock Blomberg & Gregory D. Hess, 2006. "How Much Does Violence Tax Trade?," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 599-612, November.
    11. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    12. Vicard, Vincent, 2012. "Trade, conflict, and political integration: Explaining the heterogeneity of regional trade agreements," European Economic Review, Elsevier, vol. 56(1), pages 54-71.
    13. Philippe Martin & Thierry Mayer & Mathias Thoenig, 2012. "The Geography of Conflicts and Regional Trade Agreements," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(4), pages 1-35, October.
    14. Seitz, Michael & Tarasov, Alexander & Zakharenko, Roman, 2015. "Trade costs, conflicts, and defense spending," Journal of International Economics, Elsevier, vol. 95(2), pages 305-318.
    15. De Sousa, José & Mirza, Daniel & Verdier, Thierry, 2018. "Terror networks and trade: Does the neighbor hurt?," European Economic Review, Elsevier, vol. 107(C), pages 27-56.
    16. Zsolt Darvas, 2012. "Real Effective Exchange Rates for 178 Countries: a New Database," Working Papers 1201, Department of Mathematical Economics and Economic Analysis, Corvinus University of Budapest.
    17. Laurent Didier, 2020. "The Impact of Conflict on Trade in Services: A Sector-Level Analysis," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 62(1), pages 34-48, March.
    18. Pham, Cong S. & Doucouliagos, Chris, 2017. "An Injury to One Is an Injury to All: Terrorism's Spillover Effects on Bilateral Trade," IZA Discussion Papers 10859, Institute of Labor Economics (IZA).
    19. Morris Goldstein & Mohsin S. Khan, 2017. "Income and Price Effects in Foreign Trade," World Scientific Book Chapters, in: TRADE CURRENCIES AND FINANCE, chapter 1, pages 3-81, World Scientific Publishing Co. Pte. Ltd..
    20. Amelia U. Santos-Paulino, 2007. "Trade Sustainability and Aid under Liberalization in Fragile Least Developed Countries," WIDER Working Paper Series RP2007-26, World Institute for Development Economic Research (UNU-WIDER).
    21. Philippe Martin & Thierry Mayer & Mathias Thoenig, 2008. "Make Trade Not War?," Review of Economic Studies, Oxford University Press, vol. 75(3), pages 865-900.
    22. Caruso Raul, 2003. "The Impact of International Economic Sanctions on Trade: An Empirical Analysis," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 9(2), pages 1-36, April.
    23. Ianchovichina,Elena & Devarajan,Shantayanan & Lakatos,Csilla, 2016. "Lifting economic sanctions on Iran : global effects and strategic responses," Policy Research Working Paper Series 7549, The World Bank.
    24. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    25. repec:hal:spmain:info:hdl:2441/f4rshpf3v1umfa09lb0k114o5 is not listed on IDEAS
    26. Amelia U. Santos‐Paulino, 2007. "Aid and Trade Sustainability under Liberalisation in Least Developed Countries," The World Economy, Wiley Blackwell, vol. 30(6), pages 972-998, June.
    27. Afesorgbor, Sylvanus Kwaku, 2019. "The impact of economic sanctions on international trade: How do threatened sanctions compare with imposed sanctions?," European Journal of Political Economy, Elsevier, vol. 56(C), pages 11-26.
    28. Calì, Massimiliano & te Velde, Dirk Willem, 2011. "Does Aid for Trade Really Improve Trade Performance?," World Development, Elsevier, vol. 39(5), pages 725-740, May.
    29. Matthieu Crozet & Julian Hinz, 0. "Friendly fire: the trade impact of the Russia sanctions and counter-sanctions," Economic Policy, CEPR;CES;MSH, vol. 35(101), pages 97-146.
    30. Silvia Nenci, 2011. "Tariff Liberalisation and the Growth of World Trade: A Comparative Historical Analysis of the Multilateral Trading System," The World Economy, Wiley Blackwell, vol. 34(10), pages 1809-1835, October.
    31. Mohammad Reza Farzanegan & Pooya Alaedini (ed.), 2016. "Economic Welfare and Inequality in Iran," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-95025-6.
    32. Sena Kimm Gnangnon, 2019. "Multilateral trade liberalisation helps promote export product diversification: Trade tensions damage the prospects of the poorest economies," Economic Affairs, Wiley Blackwell, vol. 39(3), pages 363-380, October.
    33. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    34. Ratnaike, Yasanji C., 2012. "Is there an empirical link between trade liberalisation and export performance?," Economics Letters, Elsevier, vol. 117(1), pages 375-378.
    35. Amelia Santos-Paulino & A.P. Thirlwall, 2004. "Trade Liberalisation And Economic Performance In Developing Countries - Introduction," Economic Journal, Royal Economic Society, vol. 114(493), pages 1-3, February.
    36. Rahul Giri & Mr. Saad N Quayyum & Rujun Yin, 2019. "Understanding Export Diversification: Key Drivers and Policy Implications," IMF Working Papers 2019/105, International Monetary Fund.
    37. Mohammad Reza Gharibnavaz & Robert Waschik, 2018. "A computable general equilibrium model of international sanctions in Iran," The World Economy, Wiley Blackwell, vol. 41(1), pages 287-307, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Firat Demir & Saleh S. Tabrizy, 2022. "Gendered effects of sanctions on manufacturing employment: Evidence from Iran," Review of Development Economics, Wiley Blackwell, vol. 26(4), pages 2040-2069, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Firat Demir & Saleh S. Tabrizy, 2022. "Gendered effects of sanctions on manufacturing employment: Evidence from Iran," Review of Development Economics, Wiley Blackwell, vol. 26(4), pages 2040-2069, November.
    2. Gnangnon, Sèna Kimm & Iyer, Harish, 2021. "Effect of Aid for Trade and Foreign Direct Investment Inflows on the Utilization of Unilateral Trade Preferences offered by the QUAD countries," EconStor Preprints 238211, ZBW - Leibniz Information Centre for Economics.
    3. Tran Manh Ha & Doan Ngoc Thang, 2023. "Economic sanction and global sourcing complexity: A cross‐country analysis," The World Economy, Wiley Blackwell, vol. 46(4), pages 1017-1050, April.
    4. Sèna Kimm Gnangnon, 2019. "Aid for Trade and Recipient Countries’ Export Structure: Does Trade Policy Liberalisation Matter?," Arthaniti: Journal of Economic Theory and Practice, , vol. 18(1), pages 56-85, June.
    5. Rangan Gupta & Giray Gozgor & Huseyin Kaya & Ender Demir, 2019. "Effects of geopolitical risks on trade flows: evidence from the gravity model," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 9(4), pages 515-530, December.
    6. Toke S. Aidt & Facundo Albornoz & Esther Hauk, 2019. "Foreign in influence and domestic policy: A survey," Cambridge Working Papers in Economics 1928, Faculty of Economics, University of Cambridge.
    7. Barry Eichengreen & Arnaud Mehl & Livia Chițu, 2021. "Mars or Mercury redux: The geopolitics of bilateral trade agreements," The World Economy, Wiley Blackwell, vol. 44(1), pages 21-44, January.
    8. Toke S. Aidt & Facundo Albornoz & Esther Hauk, 2021. "Foreign Influence and Domestic Policy," Journal of Economic Literature, American Economic Association, vol. 59(2), pages 426-487, June.
    9. Seitz, Michael & Tarasov, Alexander & Zakharenko, Roman, 2015. "Trade costs, conflicts, and defense spending," Journal of International Economics, Elsevier, vol. 95(2), pages 305-318.
    10. Gnangnon, Sèna Kimm & Priyadarshi, Shishir, 2016. "Has the multilateral Hong Kong Ministerial decision on duty free quota free market access provided a breakthrough in the Least developed countries' export performance?," WTO Staff Working Papers ERSD-2016-06, World Trade Organization (WTO), Economic Research and Statistics Division.
    11. Julian Hinz, 2023. "The ties that bind: geopolitical motivations for economic integration," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 159(1), pages 51-100, February.
    12. Gnangnon, Sèna Kimm, 2022. "Duration of WTO Membership and Investment-Oriented Remittances Flows," EconStor Preprints 251274, ZBW - Leibniz Information Centre for Economics.
    13. Korn, Tobias & Stemmler, Henry, 2022. "Your Pain, My Gain? On the Trade Relocation Effects from Civil Conflict," VfS Annual Conference 2022 (Basel): Big Data in Economics 264095, Verein für Socialpolitik / German Economic Association.
    14. Christos Kollias & Suzanna-Maria Paleologou, 2017. "The Globalization and Peace Nexus: Findings Using Two Composite Indices," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 131(3), pages 871-885, April.
    15. Fuchs, Andreas & Klann, Nils-Hendrik, 2013. "Paying a visit: The Dalai Lama effect on international trade," Journal of International Economics, Elsevier, vol. 91(1), pages 164-177.
    16. Kurtovic, Safet & Halili, Blerim & Maxhuni, Nehat, 2016. "Liberalization of Trade with Leading Trade Partners: Some Evidence from Bosnia and Herzegovina," MPRA Paper 75053, University Library of Munich, Germany, revised 04 Nov 2016.
    17. Lanre Kassim, 2013. "The Impact of Trade Liberalisation on Export Growth and Import Growth in Sub-Saharan Africa," Studies in Economics 1310, School of Economics, University of Kent.
    18. Fatemeh Rahimzadeh & Hamed Pirpour & Bahman P. Ebrahimi, 2022. "The impact of economic sanctions on the efficiency of bilateral energy exports: the case of Iran," SN Business & Economics, Springer, vol. 2(9), pages 1-18, September.
    19. Yan, Jiaqiang & Zhou, Yonghong, 2021. "Economic return to political support: Evidence from voting on the representation of China in the United Nations," Journal of Asian Economics, Elsevier, vol. 75(C).
    20. Vincenzo Bove & Leandro Elia & Petros G. Sekeris, 2014. "US Security Strategy and the Gains from Bilateral Trade," Review of International Economics, Wiley Blackwell, vol. 22(5), pages 863-885, November.

    More about this item

    Keywords

    Political agreements; Sanctions; Exports; Iran; JCPOA;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F5 - International Economics - - International Relations, National Security, and International Political Economy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:compes:v:63:y:2021:i:1:d:10.1057_s41294-020-00136-x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave-journals.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.