Geography and Human Relationships

Geography and Human Relationships

Formalizing the Shadow Economy in Borderlands: Impact on Livelihood Security and Demographic Resilience (Evidence from Iran)

Document Type : Original Article

Author
Mohammad Reza Sasouli
Assistant professor of Agricultural Economics, University of Saravan
10.22034/gahr.2026.570860.2665
Abstract
Conventional hard-security paradigms in borderlands often fail to address the root causes of

illicit trade and out-migration; thus, this study investigates the effectiveness of the “Razzaq

Scheme”—a state-led trade formalization initiative in southeastern Iran (Saravan)—as a softsecurity strategy. Specifically, it examines how transforming fuel smuggling into regulated trade

influences demographic resilience through the mediating mechanisms of livelihood security and

place attachment. Adopting a quantitative research design rooted in Institutional Theory and the

New Economics of Labor Migration (NELM), data were collected from 384 border residents via

purposive sampling and analyzed using Partial Least Squares Structural Equation Modeling

(PLS-SEM). The empirical results reveal that trade formalization has a significant positive

impact on livelihood security, which in turn strengthens residents‟ place attachment. The

findings confirm a serial mediation path, demonstrating that the Razzaq Scheme fosters

demographic resilience (intention to stay) not merely by providing income, but by converting

economic stability into a psychological bond with the territory. While existing literature

predominantly focuses on the volume of informal trade, this research bridges a critical gap by

quantifying the socio-psychological impacts of formalization policies, suggesting that “economic

formalization” serves as a superior alternative to “militarization” for stabilizing precarious

border populations in the Global South.
Keywords
Trade Formalization
Razzaq Scheme
Demographic Resilience
Livelihood Security
Borderlands
Subjects
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Geography and Human Relationships
Volume 9, Issue 2 - Serial Number 34
Summer 2026
Pages 953-963

  • Receive Date 05 January 2026
  • Accept Date 01 March 2026