The power to hurt and the effectiveness of international sanctions

Abstract

Although costs of trade disruption play a central role in theories of interstate conflict, scholars have had difficulty in constructing appropriate measures of trade wars, and few have explored how states can mitigate the resulting costs, reducing vulnerability to economic coercion. We study these questions in the context of economic sanctions, arguing that each side’s comparative advantage in exports and domestic production capabilities determine its ability to minimize costs while maximizing its power to hurt the adversary. We find support for our hypotheses, using commodity-level trade data. Sanctions are more likely to succeed when sanctioners have a comparative advantage in goods exported to the target, but more likely to fail if the target’s export portfolio is diverse or the target has a comparative advantage in exports. This is particularly true for imposed sanctions. These findings open the black box of sanction costs, improving our understanding of when economic coercion succeeds.