No More Gouda in Moscow? Distributive Effects of the Imposition of Sanctions

Abstract

How do private firms respond when they are hit by economic sanctions? Economic sanctions are a vitally important element of the European Union's foreign policy toolbox. While their importance and frequency of use increased, not much is known about the economic impact of the economic sanctions at the micro level. Yet the sanctions imposition has been recently politicized within the EU, especially in the reaction to the sanctions that EU imposed on Russia, and the counter - sanctions that ensued. Drawing on export data for all Dutch companies over the period 2013 –2016, we examine how Dutch companies responded to Russian counter -sanctions imposed on the EU after the annexation of Crimea. Our statistical matching approach suggests that while the companies exposed to the sanctions are more likely to go bankrupt compared to their unexposed counterparts, those who survive are able to weather the impact rather well in the medium -long term.