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Economic sanctions and trade flows in the neighbourhood
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Bove, Vincenzo, Di Salvatore, Jessica and Nistico, Roberto (2023) Economic sanctions and trade flows in the neighbourhood. The Journal of Law and Economics, 66 (4). pp. 671-697. doi:10.1086/725678 ISSN 0022-2186.
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Official URL: https://doi.org/10.1086/725678
Abstract
We investigate the effect of economic sanctions on trade flows in countries sharing a border with sanctioned states. According to trade models, sanctions are expected to reduce trade flows, as they disrupt established trading routes and economic relationships with suppliers and customers. However, there may also be instances in which countries circumvent trade restrictions by clandestinely exchanging goods with sanctioned countries across the border and trading on their behalf, which leads to an increase in imports and/or exports. To shed light on this issue, we employ a combination of large-N panel data analysis and comparative case studies using the synthetic control method. We find that, in the aggregate, neighboring countries experience economic costs as sanctions disrupt trade. Yet case studies uncover heterogeneity in countries’ responses, with some exhibiting an increase in trade flows. Possible explanations for these different outcomes include opportunistic behavior and increased costs.
Item Type: | Journal Article | ||||||
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Divisions: | Faculty of Social Sciences > Politics and International Studies | ||||||
Journal or Publication Title: | The Journal of Law and Economics | ||||||
Publisher: | University of Chicago Press | ||||||
ISSN: | 0022-2186 | ||||||
Official Date: | November 2023 | ||||||
Dates: |
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Volume: | 66 | ||||||
Number: | 4 | ||||||
Page Range: | pp. 671-697 | ||||||
DOI: | 10.1086/725678 | ||||||
Status: | Peer Reviewed | ||||||
Publication Status: | Published | ||||||
Re-use Statement: | © 2023 by University of Chicago Press. Accepted for publication to The Journal of Law and Economics on 15/05/2023 | ||||||
Access rights to Published version: | Restricted or Subscription Access | ||||||
Date of first compliant deposit: | 20 April 2023 | ||||||
Funder: | The study has been funded by UNU-WIDER project on "Detecting and countering illicit financial flows" | ||||||
Related URLs: | |||||||
Open Access Version: |
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