Optimization of bilateral trade under sanctions

Articles in Press

Document Type : Article

Authors

1 Khajeh Nasir Toosi University of technology - Department of Industrial Engineering - Tehran - Iran

2 Khajeh Nasir Toosi University of Technology

10.24200/j65.2023.59081.2257

Abstract

The issue of international trade and economic sanctions has been one of the important issues for every country, especially developing countries and under sanctions. Since ancient time, countries traded with other countries to meet their needs through international trade. Some countries impose some sanctions to a number of countries to achieve their political and economic goals. Studying these sanctions and trying to reduce its effects is very important for boycott countries. We also know that exchange rate fluctuations is one of the main challenges of export and import agents including public or private agents in sanction setting. Therefore, it is important to deal with the exchange rate debate and its volatility on business section. Although numerous studies in this field, few studies have been done by mathematical modeling. In this paper, we attempt to present a mathematical model for the optimization of Iran's trade exchange with its important partners, in the time of trade sanctions. Two objective functions in order to accurately represent the effect of trade sanctions and minimizing the standard deviation of the logarithm of exchange rate difference between two following years are applied to achieve a robust solution. Therefore, the problem is modeled as a mixed integer non-linear programming for selection of countries and the amount of goods exchanged. To evaluate the performance of the proposed model, the solution is compared with the commercial data of the years 1395 to 1398. The results show improved trade balance because of changing the country of origin of goods or destination of export of goods and exploitation of conversion industries in order to improve export value added. The solution which is obtained from the model to curb the effects of commercial sanctions is available. The results of the model indicate the reduction of the effect of sanctions if the appropriate program is used according to the fluctuation of the exchange rate.

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Sharif Journal of Industrial Engineering & Management

Articles in Press, Corrected Proof
Available Online from 24 June 2023

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