In the name of Allah

2ndInternationalInternational E-Conference on Economy under Sanctions

Dr. Abolfazl Shahabadi

E-Conference Scientific Chair Associate Professor, Faculty of Economics and Social Science, Bu-Ali

Sina University, Hamedan, Iran

22 September 2014

Toroud Shomal Research Company

For the second time, Toroud Shomal Research Company has established an international E-Conference on Economy under Sanctions to motivate other organizations and scientific societies to study the results of sanctions in an academic manner.

Acknowledgments

I want to thank the professors, colleagues and reviewers for their remarkable efforts in collaboration with this conference and appreciate the scholars’ participation in the conference. With the help of their high quality research the conference aimed to the peak of success.

Conference Goals

Introducing the damaging effects of sanctions; Scientific communication between Iranian and

foreign researchers; Present the scientific capabilities of the

Islamic Republic of Iran; Using the results of the conference

Theme and Sub-Theme

Explain the economic conditions of sanctioned countries;

From the perspective of macro-economic variables;

Explain the economic conditions under sanctions from the perspective of microeconomic variables;

The impact of sanctions on the production and trade of energy (oil, gas, etc.);

Theme and Sub-Theme

Economic sanctions and social variables (general health, health, Racism, Poverty, migration, food security, environment, Social Capital, etc.);

Economic sanctions and international politics and law (human rights, democracy, humanitarian aid, etc.);

Terms of economic sanctions and international monetary and financial systems;

Theme and Sub-Theme

The impact of sanctions on banking and international trade;

Economic sanctions and Doing business, entrepreneurship, SMEs;

The impact of international sanctions on international organizations and companies, FDI & FPI;

The nature and models of sanction; Manage sanctions;

Theme and Sub-Theme

Typology of sanctions; Sanctions and resistive economic; Management of organizations in terms of

sanctions; Reduce the social and economic effects of

sanctions; Geneva agreement and its consequences Military economy; Resistive economic;

Definitions Economic Sanctions

Sanction is manipulating the economic relations and cooperation to achieve political goals. In fact, sanction is a foreign policy instrument which allows the executer to oblige the targets, in line with political purposes.

Restrict freedom in foreign trade by prohibiting the trade of certain goods and the provisions of certain services

Economic Sanctions

Are ordered for foreign and security policy reasons against:

Legal and natural persons ("personal") Countries ("country-specific")

Prohibition of any trade whatsoever with or for the benefit of the addressee

Full embargo

Three Types of Economic Sanctions

1. Financial sanctions – freezing of funds and other assets

2. Trade sanctions – productsArms embargoes (e.g. military equipment,

nuclear technology)Other goods embargoes (oil of Iranian origin,

"blood diamonds")Dual-use items

Three types of economic sanctions

3. Trade sanctions – servicesProhibition of technical and financial aidInvestmentsProhibition of fulfillment of claimsTransportTravel restrictionsInsurance

Evaluate Trade Sanction Which one is worse? The sanctioned or the

killer?

Depends If the sanctioned has low export supply

elasticity or import demand elasticity, then it will get hurt dramatically due to the trade sanction; otherwise, it would not.

Now consider a case that the sanctioned has a high export supply elasticity

But the killer faces different import demand elasticity

What Factors Affect the Sanction’s Effect?

Trade openness: the smaller openness level, the less importance of international trade, the higher the elasticity is.

Characteristics of the importing products: luxury or necessity?

Duration of the Sanction: the longer the sanction, the smaller the impact is.

Sanction Coverage: the more the countries’ participation, the larger the impact is.

Categories Economies of the WorldKnowledge Based Economics

Endogenous economic growth and export-orientedEconomic growth is primarily a function of natural comparative advantage and acquiredThe main weight of products the function of (human capital, innovation, R&D, R&D Spillover, entrepreneurship, ICT, etc)

Categories Economies of the WorldResource-Based Economy

Exogenous growth and Fluctuations in economic growthEconomic growth is mainly a function of natural comparative advantageProduction is mainly a function of traditional factors of production(Labor, physical capital and natural resources) and imports of intermediate goods and capital Low demand for factors(human capital, innovation, R&D, R&D Spillover, entrepreneurship, ICT)

Categories Economies of the WorldInvestment-Driven Economy

Exogenous growth and Fluctuations in economic growthMainly based on natural comparative advantage and comparative advantage ImportedReliance on technology importsLow Competitiveness Low participation in the global economyLow per capita income

The Reasons for the Absence of Expansion of New Production

Factor Markets Lack of scientific management Lack of understanding the economic structures Lack of economic strategy consistent with the

economic structure Non-optimal allocation of resources Macroeconomic policy inconsistency

Picture Brief of the Economy of the Islamic Republic of Iran

With the abundance of natural resources and oil wealth

Frequency of human capital and many young workers

Science and technology upgrades in some fields Expanded relationships with emerging economies

(BRICS) Significant infrastructure Geopolitical importance and … on the one hand

Picture Brief of the Economy of the Islamic Republic of Iran

Exogenous growth and Fluctuations in economic growth

Oil- Dependent Economy Low share of intangible assets in total assets Low per capita income compared with

developed countries Low hi-tech exports High Unemployment High inflation rates

Picture Brief of the Economy of the Islamic Republic of Iran

High share of service sector in GDP during development plans

Reduce the share of oil and agriculture in GDP during development plans

Dependence of economic activities to import Low Competitiveness Low participation in the global economy and

… On the other hand

SuggestionsFor the following purposesIncreasing share of productivity growth in the economic growthSustained economic growth and sustainableControl inflationIncreased capital accumulation (physical, human, social, foreign, natural and financial)Less use of natural comparative advantage and a strong emphasis on acquired comparative advantage

SuggestionsFor the following purposesReduce unemploymentBalanced distribution of income and wealthExpansion of the balance of paymentsIncreasing the competitivenessReduce dependence on oil exportsModify consumption patternsAnd …

Suggestions

It is necessaryScientific ManagementEconomic reform through the coordination of macroeconomic policies (monetary, financial, foreign exchange and trade) to the policies innovation, entrepreneurship, education and research and technology)More interaction with regional organizations such as D8, G77, Shanghai cooperation organisation, OPEC and …

Suggestions

More interaction with neighbors Relations with emerging economies Enable foreign policy to facilitate trade and

investment

The End