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Does Trade Dependence Matter? A Quantitative Analysis of the Effect of Trade Dependence on the Outcome of Economic Sanctions

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https://ir.library.oregonstate.edu/concern/graduate_projects/k643b295h

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  • Economic sanctions are widely used in the international arena in order to reconcile political conflicts and retain peace between countries. Most states prefer to use economic sanctions rather than military interventions as a more efficient tool to maintain political stability and protect their own interests. Nevertheless, sanctions are not always effective in achieving the policy goal and often result in failure and welfare losses for both parties. This analysis focuses on testing the implications of power-dependence theory on economic sanctions by examining the role of trade dependence between the sender and the target in sanctions outcome. Based on power-dependence theory, the existence of trade dependence would imply that each state has some degree of control and influence over the other state. Thus, the more countries are mutually trade dependent, the more control and power they should have over each other. This empirical study utilizes the Hufbauer, Schott, Elliot, and Oegg (2007) dataset that contains information on sanctions cases from 1914 to 2000. Through logistic analysis of sanctions effectiveness this paper presents the evidence that trade dependence between the sender and the target has a significant positive effect on the achievement of sanctions policy goal. It confirms the idea that the higher the trade dependence between countries, the more likely that sanctions will be successful.
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