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Short Term Effects of Sanctions on Iran's Direct Foreign Investment (FDI)

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Amir Touliat

on 22 April 2014

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Transcript of Short Term Effects of Sanctions on Iran's Direct Foreign Investment (FDI)

The Impact of Sanctions on Iran Foreign Direct Investment.
Background info:
Iran is suspected of attempting to build atomic bombs
United States has put in series of sanctions to prevent this objective.
As of September 2006 Iran is barred from dealing directly with U.S banking system
They are as followed:
Consequences of sanction on Iran’s Direct foreign investment
Iran's Direct Investment trend and the downturn direction which is especially noticeable after the sanctions gained traction.
Consequence of these sanctions
Forecasted FDI for Iran, over the next couple of years, is to remain low.
The sanctions’ effect can be seen by the forecasted % GDP growth – the FDI impact has not been sufficient because Iran started with a small FDI, around .1% of the world, which peaked at .25 and now is back to .8%.
Consequences of Sanctions on Iran’s Direct Foreign Investment
Creator: Amir Touliat
Iran's inward direct investment and its trend
Iran is located in Middle East
Estimated population of 75 million (2012)
Background information:
Sequence of sanctions
The resolution (1696) was adopted by UN Security Council in July of 2006. It demanded that Iran halt its entire uranium enrichment-related reprocessing activities.
The drop in Iran's share of global FDI, coinciding with sanctions.
The percent change of GDP in relation to FDI
Iran's both export and import shows steady decline trends during addition of sanctions .
The resolution (1737) was adopted December 2006. It demanded Iran stop all sensitive nuclear activities, all processing and working on nuclear facilities.
The resolution (1747) was adopted in March of 2007. It demands further restriction and transparency, also bans of sales or supply of weaponry to Iran by any nation.
The resolution (1803) was adopted in March 2008. It imposed gradual sanctions on Iranian individuals and entities that could be involved with Iran’s nuclear or missile program.
The resolution (1835) was adopted in September 2008 and restated the 1st resolution.
The resolution (1929) was adopted in June 2010. It expanded the sanctions to shipping and insurance and transfer or funds to and away from Iran, crippling effect on many sectors of Iran.
The decline coincide with last sanctions that had direct effect on Iran's major financial sector.
We can see how all this correspond with share of global FDI.
All of this additionally has led to decline of both import and export.
Main export: Crude oil
The international corruption perception index (CPI) ranked Iran in 133rd place in year

Business climate portrays an unstable and doubtful environment which will deter investors. Only starting a business in Iran is easy everything else is at much higher risk.
Iran's FDI in relation to its neighbors is lower.
What does all this mean for Iran?
What are the possibilities for Iran?
There is also lack of significant data that makes it difficult to assess the effectiveness of sanctions on Iran's FDI.
Next is drop of %GDP in relation to Inward direct investment.
Full transcript