Sanction Failure: Economic Growth, Defense Expenditures, and the Islamic Republic of Iran

Armed Forces and Society, 42(4): 635-654.

32 Pages Posted: 28 Jun 2013 Last revised: 21 Jan 2019

See all articles by Bruce McDonald

Bruce McDonald

North Carolina State University

Vincent Reitano

North Carolina State University, College of Humanities and Social Sciences, Department of Political Science & Public Administration, Students

Date Written: February 16, 2016

Abstract

Political actors have assumed that economic sanctions hinder a nation’s stability by reducing its economic growth, though history has shown otherwise. One potential explanation for this phenomenon is that any decline in a growth is offset by the economic benefit they receive from a response of increased militarization. Using a defense-driven model, we test this explanation with data Iranian from 1959 to 2007. The findings show that economic sanctions have limited the development of Iran, but the influence of an increasing defense sector offsets the sanctions, suggesting sanctions may be ineffective due to the substitution effect from defense expenditures.

Keywords: Iran, economic sanctions, defense spending, defense-growth relationship

Suggested Citation

McDonald, Bruce and Reitano, Vincent, Sanction Failure: Economic Growth, Defense Expenditures, and the Islamic Republic of Iran (February 16, 2016). Armed Forces and Society, 42(4): 635-654., Available at SSRN: https://ssrn.com/abstract=2285895 or http://dx.doi.org/10.2139/ssrn.2285895

Bruce McDonald (Contact Author)

North Carolina State University ( email )

School of Public and International Affairs
Campus Box 8102
Raleigh, NC 27695
United States
919-515-2481 (Phone)

HOME PAGE: http://www.brucemcdonald.com

Vincent Reitano

North Carolina State University, College of Humanities and Social Sciences, Department of Political Science & Public Administration, Students ( email )

NC
United States

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