The Economic Impact of Iranian Proxy Militant Groups: A Systematic Literature Review

Iran’s employment of proxy militant organizations has profoundly shaped the geopolitical and economic dynamics of the Middle East, but a thorough analysis of its economic consequences has not been sufficiently addressed. This paper undertakes a systematic literature review to synthesize existing research on the economic effects of Iranian proxy militant groups, aiming to fill gaps in the present knowledge about how these entities influence regional economies. We focus on four key dimensions: Iran’s proxy warfare strategies and operations, its proxy networks and alliances, the impact of proxy activities on regional stability, and other emergent themes. By systematically analyzing peer-reviewed studies, policy reports, and gray literature, we identify patterns, contradictions, and unresolved questions in the discourse. The analysis indicates that Iranian proxy groups produce diverse economic impacts, such as the disruption of local markets, the redirection of resources into conflict, and the establishment of informal economies linked to illegal operations. However, the literature also highlights instances where these groups inadvertently foster economic resilience in certain communities through patronage networks. The results highlight the necessity for a more refined approach to evaluate the economic impacts of proxy conflicts, especially concerning sustained growth and regional cohesion. We conclude by proposing directions for future research and highlight the necessity of interdisciplinary methods to unravel the intricate relationship between proxy militancy and economic outcomes.