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The Effects of Economic Sanctions on Foreign Asset Expropriation

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  • Hoon Lee
  • David Lektzian
  • Glen Biglaiser

Abstract

Studies suggest that home countries impose economic sanctions following host state expropriation of home firms. However, and not addressed in the empirical literature, is the possibility that sanctions lead targeted countries to nationalize firms from sender countries. Using bilateral expropriation data from 1985 to 2010, and controlling for endogeneity issues, we find that sanctions significantly increase expropriation risk, encouraging targeted states to inflict pain in a reciprocal manner on sender countries. Expropriations also enable targeted nations to acquire economic assets from foreign firms, undermining the restricting goals of sanctioning states, and provide opportunities for leaders to show political resolve at home by standing up to senders. Our results are robust using monadic or dyadic data and different statistical methods, indicating another sanction-busting strategy used by targeted countries.

Suggested Citation

  • Hoon Lee & David Lektzian & Glen Biglaiser, 2023. "The Effects of Economic Sanctions on Foreign Asset Expropriation," Journal of Conflict Resolution, Peace Science Society (International), vol. 67(2-3), pages 266-296, February.
    • Handle: RePEc:sae:jocore:v:67:y:2023:i:2-3:p:266-296
    DOI: 10.1177/00220027221118250
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    References listed on IDEAS

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    Cited by:

    1. Jerg Gutmann & Pascal Langer & Matthias Neuenkirch, 2023. "International Sanctions and Emigration," Research Papers in Economics 2023-11, University of Trier, Department of Economics.

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