The economic impact of the lifting of sanctions on tourism in Iran: a computable general equilibrium analysis

Abstract

The imposition of sanctions on Iran, after the Islamic Revolution in 1979, resulted in economic hardship. Many problems were experienced, such as increased unemployment and high inflation, currency fluctuations and economic instability. One area that was hard hit was the tourism sector. With the lifting of United Nations sanctions on 16 January 2016, there is an opportunity for an increase in international tourists to experience the natural attractions and cultural heritage that Iran has to offer. This research employs a single-country multi-sector computable general equilibrium model to estimate the economic impact of the lifting of sanctions to tourism and the wider economy in Iran. The findings reveal that tourism provides a boost to the economy; however, there are redistributive effects that draw resources away from other export sectors. However, just as in the past where there has been a heavy reliance on oil and natural gas, expanding tourism too quickly will also cause problems. Moderate tourism growth would be the appropriate sustainable path to take.

Keywords:

• economic impacts
• sanctions
• computable general equilibrium model
• Iran

Disclosure statement

No potential conflict of interest was reported by the authors.

ORCID

Stephen Pratt http://orcid.org/0000-0002-6550-132X