Aviation Economy and the Balance of Payments in Iraq: A Hybrid Analysis Using SWOT–TOPSIS

Abstract

 The civil aviation sector is a pillar of economic growth strategy due to its effective role in facilitating commercial operations and expanding tourism services, in addition to providing job opportunities. In rentier economies such as Iraq, where oil is the main source of income, it is important to stimulate non-oil sectors, particularly aviation services, in order to strengthen the balance of payments' capacity to achieve comprehensive economic diversification. The objective of this study is to analyse the structural and financial framework of the civil aviation sector in Iraq during the period (2015-2024) and assess its ability to sustainably support the balance of payments.

This study uses a mixed analytical framework combining the SWOT and TOPSIS methods, in addition to multi-criteria decision-making tools based on the Python language (PY Decision). Quantitative indicators based on passenger traffic, air cargo volume and aviation revenues were extracted using official data from the Central Bank of Iraq, the Ministry of Transport and international aviation organisations, The research findings regarding the balance of payments are as follows:

The research findings show that the aviation sector is strategically important as a catalyst for improving Iraq's external balance, particularly the services account in the balance of payments. Unlike rentier exports, aviation services—such as passenger transport, cargo logistics, and flight operations—generate foreign cash flows that are less dependent on commodity price cycles and more resilient to global demand fluctuations.

Simulation analysis shows that digital transformation (alternative B) emerges as the most effective measure, capable of increasing aviation revenues by 25% and reducing the services account deficit by up to 40% by 2030.

 These gains can be achieved by improving transaction transparency, enhancing ticketing and shipping processes, and reducing foreign currency leakage through domestic services. In addition, regulatory reforms (Alternative D) complement this scenario by addressing structural deficiencies and improving regulatory responsiveness.