The effects of economic sanctions on Iran's economic growth

Economic growth is one of the key objectives of every country. Iran is also among the countries that have been subjected to numerous economic sanctions over different periods. Therefore, the main objective of this study is to determine the impact of economic sanctions on Iran's economic growth. This study uses time series data for the period 1991–2023 and applies nonlinear econometric models, specifically the Logit and Probit models. In these models, the dependent variable is the per capita GDP growth rate, defined as a binary variable (0 and 1). The model estimations show that the growth rate of fixed capital investment and the growth rate of exports of goods and services have significant and positive effects on economic growth. In contrast, economic sanctions and the labor force participation rate have shown significant and negative effects on economic growth. In particular, the implementation of sanctions has been found to reduce the probability of positive economic growth by an average of 32 to 33 percent. This indicates the considerable impact of sanctions in weakening Iran's economic growth. Additionally, the unexpected negative effect of the labor force participation rate may be due to structural and institutional challenges in Iran's labor market. Generally, higher labor force participation supports growth; however, under Iran's specific economic conditions, this relationship may not hold. Other variables were not found to be statistically significant in the model. Overall, the results obtained from both the Logit and Probit models are stable and consistent, and the alignment and significance of the estimated coefficients indicate the robustness of the analysis and the high reliability of the study's findings.