Economic sanctions are a common policy tool for influencing foreign governments and societies. They have been used since ancient times, with the aim of limiting trade in order to starve a targeted state into submission or punish it for its actions. Sanctions are seen as a more benign and less costly alternative to military statecraft or diplomatic censure.
However, it should be noted that sanctions do not always succeed and can even backfire. They can become entrenched and domestic groups with vested interests may emerge, making it difficult to lift sanctions as goals are achieved or change. The case of the US sugar embargo against Cuba is a familiar example.
The use of economic sanctions is not a panacea, and they often cause harm to the target country and its citizens. But the benefits of sanctions may outweigh their costs, particularly if they are used in conjunction with other policies like political encouragement and social welfare support. In addition, they are a useful tool to implement modest policy changes or protect other countries from oppressive regimes, such as the Guinea sanction of 2005-2010 that prevented a war and saved lives from brutal oppression.
Our data for sanctions on total bilateral trade between OECD countries (as measured by world exports in 1995) show that the coefficients are generally insignificant or have positive signs suggesting a pick-up in exports some years after limited and moderate sanctions have been lifted. However, because the analysis excludes investment flows and services exports and only looks at goods, great care should be taken in interpreting the results.
