Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/249490 
Year of Publication: 
2021
Series/Report no.: 
WIDER Working Paper No. 2021/184
Publisher: 
The United Nations University World Institute for Development Economics Research (UNU-WIDER), Helsinki
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. To address this issue, we combine large-N panel data analysis and comparative case-study analysis using the synthetic control method. We find that, on average, economic sanctions tend to have a negative effect on trade patterns. Yet, case studies reveal a significant degree of heterogeneity in countries' responses. We present several cases where we detect a substantial increase in trade flows when land neighbours are targeted with economic sanctions.
Subjects: 
economic sanctions
trade
land neighbours
synthetic control method
JEL: 
F14
F51
F53
P16
Persistent Identifier of the first edition: 
ISBN: 
978-92-9267-124-2
Document Type: 
Working Paper

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