To Comply or Not to Comply: Understanding Neutral Country Supply Chain Responses to Russian Sanctions

Haishi Li (), Zhi Li (), Ziho Park (), Yulin Wang () and Jing Wu ()
Additional contact information
Haishi Li: The University of Hong Kong
Zhi Li: The Chinese University of Hong Kong
Ziho Park: National Taiwan University
Yulin Wang: The University of Hong Kong
Jing Wu: The Chinese University of Hong Kong

No 24-01, Working Papers from NET Institute

Abstract: We study how firms in neutral countries adjusted supply chains to Western sanctions on Russia. Firms with headquarters in sanctioning countries (sanctioning MNEs) reduced sanctioned product exports to Russia, showing MNEs' global influence. However, domestic firms in neutral countries increased sanctioned exports, weakening sanctions. Firms exporting more to sanctioning countries complied more, while those sourcing more inputs rerouted sanctioned products to Russia. Sanctioning MNEs expanded exports to both sanctioning and Russia-friendly countries, blending compliance and evasion. Financial sanctions led sanctioning MNEs to reduce imports from Russia in risky sectors. To improve sanctions, stronger secondary sanctions and MNE involvement are essential.

Keywords: Global Supply Chains; Geopolitical Risk; International Conflict (search for similar items in EconPapers)
JEL-codes: F14 F63 O19 (search for similar items in EconPapers)
Pages: 89 pages
Date: 2024-09
New Economics Papers: this item is included in nep-cis, nep-int and nep-inv
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.netinst.org/Li_24-01.pdf (application/pdf)
no

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:net:wpaper:2401

Access Statistics for this paper

More papers in Working Papers from NET Institute
Bibliographic data for series maintained by Nicholas Economides ().