The Impact of International Economic Sanctions on Trade: An Empirical Analysis

By Raul Caruso. Social Science Research Network, 2003

231 citations recorded by the source corpus.

International economic sanctions appear to be a common and recurring feature of political interactions between states. In particular, the United States is the country which has most frequently applied negative economic sanctions after World War II. In a parallel way, several measures, imposed by a multilateral organisation like the United Nations have taken place in recent years. This paper provides, through a gravity model approach, an estimation of the impact of economic negative sanctions on international trade. First, the study reports panel gravity estimates of bilateral trade between the U.S. and 49 target countries over the period 1960-2000, inclusive. The results show that extensive and comprehensive sanctions have a large negative impact on bilateral trade, while this is not the case for limited and moderate sanctions. A second estimation focuses on the impact of unilateral U.S. sanctions on bilateral trade volume between target countries and the other G-7 countries over the same period. The results show that unilateral extensive sanctions have a large negative impact, while limited and moderate ones induce a slight positive effect on other G-7 countries bilateral trade. Thus, in the first case the hypothesis of negative 'network effects' is confirmed, while in the latter the sanctions-busting argument should be defended. In both estimations, however, multilateral sanctions demonstrate a large negative impact on trade flows.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/d8457ddf5d4964c7220d52dcbd4399727674bff8

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Citations in the corpus

Between the hammer and the anvil: The impact of economic sanctions and oil prices on Russia’s ruble (2016, methodology): “Using a gravity regression approach, Caruso (2003) reported negative effects of170 economic sanctions on trade.”
The global sanctions data base (2020, background): “Valuable analytical and quantitative contributions include Pape (1997), Hufbauer and Oegg (2003), Caruso (2003), Yang et al. (2004), Hufbauer et al. (2007), Morgan et al. (2009), Crozet and Hinz (2017), Haidar (2017), Draca et al. (2018), Afesorgbor (2018), Ahn and Ludema (2019) and Besedes et al.…”
The impact of economic sanctions on international trade: How do threatened sanctions compare with imposed sanctions? (2019, background): “Previous studies that focused on the trade e ects of sanctions such as Caruso (2003) and Hufbauer et al. (2007) restrict their analyses to the US as the only sender of sanctions while Morgan et al. (2014) have shown through their TIES database that there are other frequent senders of sanctions…”
The Impact of Economic Sanctions on Income Inequality of Target States (2016, background): “…and Son (2015), Neuenkirch and Neumeier (2015a, 2015b), Dizaji and van Bergeijk (2013), Yang et al. (2009), Kaempfer and Lowenberg (2007a) and Caruso (2003) have analyzed how these episodes of sanctions have adverse economic outcomes on national currency, poverty, GDP, trade, government…”
Coercive or Corrosive: The Negative Impact of Economic Sanctions on Democracy (2010, background): “Therefore, due to data limitations, we choose to divide sanctions into two categories (for a similar operationalization, see Caruso 2003 ; Peksen 2009 ; Yang et al.”