Economic Strategy

Economic Strategy

Investigating the effect of political stability on Iran's economic growth by separating the oil and non-oil sectors (with emphasis on the general policies of resistance economy)

Document Type : Original Article

Author
Reza Alaei
Assistant Professor, Department of Economics, Faculty of Economics and Social Sciences, Shahid Chamran University of Ahvaz. Ahvaz
10.22034/es.2024.446365.1743
Abstract
Establishing stability in the national economy is one of the issues raised in the general policies of the resistance economy. Undoubtedly, one of the effective factors in economic stability is political stability Therefore, the present study aims to investigate the relationship between political stability and economic growth in Iran as one of the most important national economic indicators. Considering that Iran is a country whose economy is dependent on oil, the present study seeks to examine the relationship between political stability and economic growth in Iran. In this regard, Iran's economy is divided into two parts that named oil and non-oil parts and the relationship between political stability and economic growth is surveyed in three scenarios related to the total production of the economy, oil production and non-oil production in Iran. The vector autoregressive method and the periodic data of 1984-2022 are used for this purpose. The results showed that increasing political stability in the country's economy (total part) leads to an increase in government expenditures, exports and investment. While the increase in production in the oil sector has led to an increase in investment, labor, government expenditures, political stability, and the occurrence of political shock will change the government’s cost in short run; but it is affecting oil exports as well as the volume of investment in the oil sector, in the long run. The results of the non-oil model also showed that increase in production leads to an increase in labor, exports, private and public investment, and political stability. Political risk shocks in the non-oil sector will also affect both private and government investment in the short run; but this effect on public sector investment is more than private sector investment, In the long run. 
Keywords
political stability
economic growth
oil economy
non-oil economy
var model

Subjects

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  • Receive Date 01 February 2024
  • Revise Date 09 April 2024
  • Accept Date 29 April 2024