The Impact of export restrictions on the structure of Iran's non-oil export with an emphasis on mining sector

Abstract

The present study investigated the factors affecting Iran’s non-oil exports especially in exportation of mineral products with an emphasis on export restrictions. For this purpose and in the first step, the literature on the export restrictions was reviewed and the main restrictions imposed on Iran’s non-oil exports in the recent decade were taken into consideration. In the next step and in a descriptive examination, the structure of Iran’s non-oil export was considered in terms of factor intensity of production and the technology level, and the impact of international sanctions was identified as the main export restriction on this structure. In the last step, the demand for and the supply of Iran’s non-oil exports in the period 1987-2017 were estimated in the framework of Simultaneous Equation Model (SEM) and using Two-Stage least squares (2SLS) for total Iran’s non-oil exports and its mining sector for the purpose of modeling to determine the factors affecting the exportation and examining the impacts of sanctions. The results show that Iran’s non-oil exports have decreased as a result of the international sanctions despite the foreign exchange surge in Iran in 2012. In addition to these sanctions, the structure of Iran’s non-oil export has not undergone any manifest change in terms of the extent of the factor intensity of production, while as far as technology is concerned, the exportation of higher-technology products has been impacted by the sanctions to a greater extent. According to the estimated coefficients in the function of demand for non-oil exports, the price of the foreign goods and the revenues of other countries are some of the main factors affecting the demand for Iran’s exports, and the price and income elasticities in the minerals exportation sector have been obtained as higher than those of the total non-oil exports. The important point in estimating the demand function is that the coefficient of dummy variable is different in estimating the impact of the sanctions such that this coefficient is negative and significant for Iran’s total non-oil exports indicating the effectiveness of the sanctions in restricting Iran’s non-oil exports while the coefficient for the mineral products exports is positive for mineral product exportation. In conclusion, it should be mentioned that according to the achievements of the present study and the estimated model, more than two thirds of Iran’s non-oil exports are composed of the raw and resource-based products, and the factors affecting the demand and supply in exportation show that Iran’s non-oil exports are mainly demand-oriented and some factors such as the world prices, revenues of other countries and sanctions were more effective in restricting them than the supply factors such as investment or roductivity. The results of the model and structure analysis show the small impact of the sanctions on raw materials sectors.