IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_10630.html
   My bibliography  Save this paper

The Economic Costs of Trade Sanctions: Evidence from North Korea

Author

Listed:
  • Jihee Kim
  • Kyoochul Kim
  • Sangyoon Park
  • Chang Sun

Abstract

This paper investigates the economic costs of the recent United Nations sanctions on North Korea. Exploiting a novel data set on North Korean firms, we construct measures of regional exposure to export and intermediate input sanctions and show that trade sanctions cause sharp declines in local nighttime luminosity. Additional analysis of newly available product-level price data reveals that import sanctions led to significant increases in market prices. We then estimate a quantitative spatial equilibrium model using cross-region variations. The model implies that the sanctions reduced the country’s manufacturing output by 12.9% and real income by 15.3%. We further quantify the potential impact of alternative sanction scenarios.

Suggested Citation

  • Jihee Kim & Kyoochul Kim & Sangyoon Park & Chang Sun, 2023. "The Economic Costs of Trade Sanctions: Evidence from North Korea," CESifo Working Paper Series 10630, CESifo.
    • Handle: RePEc:ces:ceswps:_10630
    as

    Download full text from publisher

    File URL: https://www.cesifo.org/DocDL/cesifo1_wp10630.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Lee, Yong Suk, 2018. "International isolation and regional inequality: Evidence from sanctions on North Korea," Journal of Urban Economics, Elsevier, vol. 103(C), pages 34-51.
    2. David H. Autor & David Dorn & Gordon H. Hanson, 2013. "The China Syndrome: Local Labor Market Effects of Import Competition in the United States," American Economic Review, American Economic Association, vol. 103(6), pages 2121-2168, October.
    3. Simonovska, Ina & Waugh, Michael E., 2014. "The elasticity of trade: Estimates and evidence," Journal of International Economics, Elsevier, vol. 92(1), pages 34-50.
    4. Donaldson, Dave & Atkin, David, 2015. "Who?s Getting Globalized? The Size and Implications of Intra-national Trade Costs," CEPR Discussion Papers 10759, C.E.P.R. Discussion Papers.
    5. Neuenkirch, Matthias & Neumeier, Florian, 2015. "The impact of UN and US economic sanctions on GDP growth," European Journal of Political Economy, Elsevier, vol. 40(PA), pages 110-125.
    6. Paul Goldsmith-Pinkham & Isaac Sorkin & Henry Swift, 2020. "Bartik Instruments: What, When, Why, and How," American Economic Review, American Economic Association, vol. 110(8), pages 2586-2624, August.
    7. Timothy J. Bartik, 1991. "Who Benefits from State and Local Economic Development Policies?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number wbsle, August.
    8. Brian K. Kovak, 2013. "Regional Effects of Trade Reform: What Is the Correct Measure of Liberalization?," American Economic Review, American Economic Association, vol. 103(5), pages 1960-1976, August.
    9. Gibson, John & Olivia, Susan & Boe-Gibson, Geua & Li, Chao, 2021. "Which night lights data should we use in economics, and where?," Journal of Development Economics, Elsevier, vol. 149(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Donghyun Ahn & Jeasurk Yang & Meeyoung Cha & Hyunjoo Yang & Jihee Kim & Sangyoon Park & Sungwon Han & Eunji Lee & Susang Lee & Sungwon Park, 2023. "A human-machine collaborative approach measures economic development using satellite imagery," Nature Communications, Nature, vol. 14(1), pages 1-10, December.
    2. Raul Caruso & Maria Cipollina, 2023. "The Effect of Economic Sanctions on World Trade of Mineral Commodities. A Gravity Model Approach from 2009 to 2020," DISCE - Quaderni del Dipartimento di Politica Economica dipe0034, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. César, Andrés & Falcone, Guillermo & Gasparini, Leonardo, 2021. "Costs and benefits of trade shocks: Evidence from Chilean local labor markets," Labour Economics, Elsevier, vol. 73(C).
    2. Yu, Chan, 2023. "The role of immigrants in the United States labor market and Chinese import competition," Journal of International Economics, Elsevier, vol. 144(C).
    3. Rodrigo Adão & Costas Arkolakis & Federico Esposito, 2019. "General Equilibrium Effects in Space: Theory and Measurement," NBER Working Papers 25544, National Bureau of Economic Research, Inc.
    4. Liu, Maggie Y., 2023. "How does globalization affect educational attainment? Evidence from China," International Economics, Elsevier, vol. 174(C), pages 138-159.
    5. Ran Abramitzky & Philipp Ager & Leah Platt Boustan & Elior Cohen & Casper W. Hansen, 2019. "The Effects of Immigration on the Economy: Lessons from the 1920s Border Closure," NBER Working Papers 26536, National Bureau of Economic Research, Inc.
    6. Kirill Borusyak & Peter Hull & Xavier Jaravel, 2022. "Quasi-Experimental Shift-Share Research Designs [Sampling-based vs. Design-based Uncertainty in Regression Analysis]," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 89(1), pages 181-213.
    7. Pablo D Fajgelbaum & Pinelopi K Goldberg & Patrick J Kennedy & Amit K Khandelwal, 2020. "The Return to Protectionism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(1), pages 1-55.
    8. David A. Jaeger & Joakim Ruist & Jan Stuhler, 2018. "Shift-Share Instruments and the Impact of Immigration," Working Papers 2018-007, Human Capital and Economic Opportunity Working Group.
    9. Yu, Jisang & Villoria, Nelson B. & Hendricks, Nathan P., 2022. "The incidence of foreign market tariffs on farmland rental rates," Food Policy, Elsevier, vol. 112(C).
    10. Sofía Fernández Guerrico, 2023. "Trade Shocks, Population Growth, and Migration," ULB Institutional Repository 2013/357236, ULB -- Universite Libre de Bruxelles.
    11. Amuedo-Dorantes, Catalina & Arenas-Arroyo, Esther & Sevilla, Almudena, 2018. "Immigration enforcement and economic resources of children with likely unauthorized parents," Journal of Public Economics, Elsevier, vol. 158(C), pages 63-78.
    12. Ferdinando Monte & Stephen J. Redding & Esteban Rossi-Hansberg, 2018. "Commuting, Migration, and Local Employment Elasticities," American Economic Review, American Economic Association, vol. 108(12), pages 3855-3890, December.
    13. Joan Monras, 2020. "Immigration and Wage Dynamics: Evidence from the Mexican Peso Crisis," Journal of Political Economy, University of Chicago Press, vol. 128(8), pages 3017-3089.
    14. William R Kerr, 2018. "Heterogeneous Technology Diffusion and Ricardian Trade Patterns," The World Bank Economic Review, World Bank, vol. 32(1), pages 163-182.
    15. Yu, Jisang & Villoria, Nelson B. & Hendricks, Nathan P., 2019. "The Incidence of Foreign Market Accessibility on Farmland Rental Rates," 2019: Recent Advances in Applied General Equilibrium Modeling: Relevance and Application to Agricultural Trade Analysis, December 8-10, 2019, Washington, DC 339333, International Agricultural Trade Research Consortium.
    16. Paul Goldsmith-Pinkham & Isaac Sorkin & Henry Swift, 2020. "Bartik Instruments: What, When, Why, and How," American Economic Review, American Economic Association, vol. 110(8), pages 2586-2624, August.
    17. Peter Haan & Izabela Wnuk, 2024. "The Effect of Migration on Careers of Natives: Evidence from Long-term Care," Discussion Papers of DIW Berlin 2070, DIW Berlin, German Institute for Economic Research.
    18. Juan Blyde & Matias Busso & Kyunglin Park & Dario Romero, 2023. "Short‐ and long‐run labor market adjustment to import competition," Review of International Economics, Wiley Blackwell, vol. 31(4), pages 1552-1569, September.
    19. Facchini, Giovanni & Liu, Maggie Y. & Mayda, Anna Maria & Zhou, Minghai, 2019. "China's “Great Migration”: The impact of the reduction in trade policy uncertainty," Journal of International Economics, Elsevier, vol. 120(C), pages 126-144.
    20. Sarah Xue Dong, 2021. "The effect of labour demand on women’s intra-household decision power: Evidence from Indonesia," Departmental Working Papers 2021-01, The Australian National University, Arndt-Corden Department of Economics.

    More about this item

    Keywords

    trade sanction; regional economy; spatial equilibrium; North Korea;
    All these keywords.

    JEL classification:

    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • P20 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_10630. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/cesifde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.