Economic sanctions are an expression of conflict, and they’re a common tool to apply pressure to troublesome regions or countries. The goal is to ratchet up pressure on a targeted country or region without plunging them into a full-blown humanitarian crisis. Striking that delicate balance requires a deep understanding of a targeted nation’s vulnerabilities and dependencies. For example, sanctions that impact oil exports, as well as a targeted country’s primary source of income, require a precise assessment of the economy’s interconnectivity and vulnerability to trade partner withdrawals.
Embargoes, export restrictions, capital controls (to block access to international capital markets), and visa bans on officials, private citizens, and their immediate families all fall into the category of economic sanctions. Each has a different effect on trade, and these effects accumulate over time.
The research literature has employed a variety of methodologies to measure the economic consequences of sanctions. Some regression models use total bilateral trade, or a subset of it, as the dependent variable; others use only exports, or a subset of those. A few studies have used dummy variables that distinguish between target and sender. The dummy variables take on values ranging from 0 to 1 for both targets and senders, reflecting the severity of each country’s sanction status.
But while evidence points to the negative impacts of sanctions, they may also have political benefits for those imposing them. Sanctions may help consolidate power within a regime, or make the target government more willing to engage in policy change.