The Effectiveness of Global Economic Sanctions

Tobias Allingham, Joachim Philip Bisgaard and Frederik Christian Gade

Chapter 8 in Business and Policy Challenges of Global Uncertainty:European Perspectives, 2025, pp 205-233 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Economic sanctions have become the first choice to resolve diplomatic conflicts in modern times. They were recently applied in relation to the Russian invasion of Ukraine. This chapter attempts to uncover whether the frequent use of sanctions is associated with the claimed results by applying a combination of quantitative and qualitative data analyses. The primary quantitative data source is an established data set on economic sanctions and a collection of macroeconomic data on target economies. The qualitative data are extracted from scientific studies and their supportive theories, focusing on seven key criteria for sanction success. The initial analysis is formed around prior sanctions, including Iran in 1984 and Russia in 2014. This unveils an effectiveness rate of around 45 percent during 1970–2005, slightly above what is suggested by the literature. It shows a disproportionate use of mild sanctions, such as import restrictions, that overall have lower effectiveness. The US sanctions on Iran in 1984 had relatively limited influence, with the imposed sanctions failing to induce any political changes. The EU sanctions on Russia in 2014 show that the implementation of sanctions failed to accomplish their intended effects, although they put pressure on the Russian economy and its cross-border trade volume. The analysis then considers the expected effects of current sanctions against Russia, suggesting a probability of around 65 percent ineffectiveness, partly due to increased economic costs for the EU.

Keywords: Business Ecosystems; China; Corporate Diplomacy; Deglobalization; Data Regulation; Economic Sanctions; EU Chips Act; India; Money Laundering; Microchips; Multinational Enterprise; Public Responses; The European Automotive Industry; The Global Chip Industry; The Global Shipping Industry; Transnational Management; Uncertainty (search for similar items in EconPapers)
JEL-codes: F2 F23 F5 (search for similar items in EconPapers)
Date: 2025
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