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The Impact of International Economic Sanctions on Trade An empirical Analysis

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  • Raul Caruso

    (Università Cattolica del Sacro Cuore di Milano)

Abstract

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.

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Bibliographic Info

Paper provided by EconWPA in its series International Trade with number 0306001.

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Length: 29 pages
Date of creation: 04 Jun 2003
Date of revision:
Handle: RePEc:wpa:wuwpit:0306001

Note: Type of Document - PDF Format; prepared on PC; pages: 29 ; figures: included
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Web page: http://128.118.178.162

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Keywords: International negative sanctions; international trade; gravity model;

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Cited by:
  1. Jinhwan Oh, 2011. "Does Economic Sanction Work? The Case of North Korea," ERSA conference papers ersa10p621, European Regional Science Association.
  2. Brauer, Jurgen & Caruso, Raul, 2011. "Peace economists and peace economics," MPRA Paper 34927, University Library of Munich, Germany.
  3. Massoud Tansa G. & Magee Christopher S., 2012. "Trade and Political, Military, and Economic Relations," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 18(1), pages 1-39, May.

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