Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/323225 
Year of Publication: 
2025
Series/Report no.: 
Kiel Working Paper No. 2295
Publisher: 
Kiel Institute for the World Economy (IfW Kiel), Kiel
Abstract: 
Do trade dependencies leave countries vulnerable to geopolitical coercion? We study the economic costs of trade and financial sanctions, from 1920 to the present. We first develop a continuous measure of sanction intensity, using bilateral commodity-level data to calculate the importance of specific flows that fall under sanctions. We find that sanctions inflict relatively small costs on average: sanctioning 1% of GDP worth of imports or exports leads to approximately 0.3 percentage points of lost GDP over a 5-year period and a 0.1 percentage point increase in unemployment. However, we show that sanctions are far more costly for countries whose trade is highly concentrated, and for countries that rely heavily on exporting primary commodities. Low income and developing countries appear most vulnerable to trade sanctions, while high income financial centers and some EU countries are among the most exposed to financial sanctions.
Subjects: 
Trade sanctions
Trade dependencies
Vulnerability to sanctions
Financial sanctions
Economic coercion
Effects of sanctions
JEL: 
F13
F14
F41
F51
Document Type: 
Working Paper

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