The impact of economic sanctions on international trade: How do threatened sanctions compare with imposed sanctions?

Sylvanus Afesorgbor

European Journal of Political Economy, 2019, vol. 56, issue C, 11-26

Abstract: We draw on established theoretical works in international political economy to compare the empirical effect of threatened and imposed economic sanctions on international trade. To deepen the analysis, we analyze whether there are any differential effects when different instruments of sanctions are employed, as well as whether the effect of sanctions is product specific. To do this, we use the gravity model and recent detailed disaggregated data on sanctions spanning the period 1960–2009. Our results show that the impact of threatened sanctions differs qualitatively and quantitatively from imposed sanctions. Whereas imposed sanctions lead to a decrease in the trade flow between the sender and its target, a threat of sanctions leads to an increase. The positive impact of the threat may be due to economic agents in both the sender and its target resorting to stockpiling prior to the actual imposition of sanctions to minimize any adverse consequences of the sanctions. These differential effects of threatened and imposed sanctions also extend to food and medicinal products, as well as when different instruments of sanctions are employed.

Keywords: Threats; Impositions; Economic sanctions; Gravity model; International trade (search for similar items in EconPapers)
JEL-codes: F14 F51 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (76)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:56:y:2019:i:c:p:11-26

DOI: 10.1016/j.ejpoleco.2018.06.002

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