Domestic Consequences of Economic Sanctions

Abstract

Are economic sanctions costly for the sanctioning state? Some scholars argue that sanctions are costly tools used to achieve foreign policy goals, while others argue that sanctions are relatively costless tools leaders use to generate domestic political support. These arguments cannot be true at the same time. This dissertation examines this contradiction and evaluates the costs of sanctions at the national, firm, and individual levels of analysis. Economic sanctions have domestic economic and political consequences. Economic sanctions interrupt otherwise profitable commercial activities. These interventions create winners and losers. Like other forms of economic intervention, winners will support the use of sanctions and losers will oppose them. But the consequences of sanctions can be difficult to predict. Sanctions are heterogenous and have heterogenous effects. Sanctions don't lead to major changes in sender trade volumes or unemployment levels because the costs of sanctions are not evenly distributed throughout senders' economies. Economic sanctions are only costly for firms that have commercial interests in targeted states. On average, sanctions are economically costly and politically unpopular, but there are exceptions. How the public responds to sanctions depends on the features of the individual episodes. I use a variety of time series techniques and a laboratory experiment to test these arguments. The results from this dissertation suggest a need to rethink the way sanctions scholars conceptualize the economic and political costs of sanctions for the sanctioning state.