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Economic sanctions and trade flows in the neighbourhood

Author

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  • Vincenzo Bove
  • Jessica Di Salvatore
  • Roberto Nisticò

Abstract

We investigate the effect of economic sanctions on trade flows in countries sharing a border with the sanctioned state. On the one hand, trade models suggest that trade flows should decrease as sanctions disrupt trading routes and economic ties with suppliers and customers. On the other hand, countries can circumvent trade restrictions by clandestinely exchanging goods with sanctioned countries across the border and trading on its behalf. If this is the case, we should expect an increase in their imports and/or exports.

Suggested Citation

  • Vincenzo Bove & Jessica Di Salvatore & Roberto Nisticò, 2021. "Economic sanctions and trade flows in the neighbourhood," WIDER Working Paper Series wp-2021-184, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2021-184
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    More about this item

    Keywords

    Sanctions; Trade; Synthetic control method;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • F52 - International Economics - - International Relations, National Security, and International Political Economy - - - National Security; Economic Nationalism
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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