Optimization of bilateral trade under sanctions

Document Type : Article

Authors

Industrial engineering at K. N. Toosi University of Technology, Tehran, Iran.

Abstract

The issue of international trade and economic sanctions has been one of the important issues for every country, especially developing countries and those under sanctions. Since ancient times, countries traded with other countries to meet their needs through international trade. Some countries impose sanctions on a number of countries to achieve their political and economic goals. Studying these sanctions and reducing their effects is very important for boycotting countries. We also know that exchange rate fluctuations are one of the main challenges export and import agents face in sanction settings, including public or private agents. Therefore, it is important to deal with the exchange rate debate and its volatility in the business section. Although numerous studies in this field have been done, 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 during trade sanctions. Two objective functions, which are to accurately represent the effect of trade sanctions and minimize the standard deviation of the logarithm of exchange rate difference between the two following years, are applied to achieve a robust solution. Therefore, the problem is modeled as a mixed integer non-linear programming for selecting 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 the destination of export of goods and exploitation of conversion industries to improve export value added. The solution obtained from the model to curb the effects of commercial sanctions is available. The model results indicate reducing the effect of sanctions if the appropriate program is used according to the exchange rate fluctuation

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References

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Sharif Journal of Industrial Engineering & Management
Volume 40, Issue 2
March 2025
Pages 3-15

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