Instrument Choice and the Effectiveness of International Sanctions: A Simultaneous Equations Approach

Abstract

The literature on economic sanctions suggests that the choice of policy instrument, for example trade sanctions, financial sanctions, or military intervention, is endogenous to the political process and, in particular, to the policy outcome sought by the sanctioner. But the choice of instrument also affects the outcome of the sanctions. Therefore, the sanctions policy outcome and the probabilities of the sanctioner's adoption of different sanctions instruments are jointly determined. To capture this endogeneity, multivariate probit and logit models are estimated using data from Hufbauer, Schott & Elliott, with the random utilities to the sanctioner of choosing military action, trade sanctions, and financial sanctions as dependent variables. The expected probabilities of choosing these alternatives are then incorporated as explanatory variables in predicting the success of the sanctions in attaining their political objectives. This procedure generates simultaneous estimates of the determinants of both instrument choice and sanctions success. The empirical results indicate that military force is less likely to be used against an economically healthy and politically stable target than against a more vulnerable target. However, military action is encouraged by third-country assistance to the sanctioned country and by a high cost of sanctions to the sanctioner. Financial sanctions are more likely to be used against a target that receives third-country support but are less likely against an economically healthy country. Sanctions success is positively correlated with the degree of warmth in relations between sanctioner and target prior to the sanctions; negatively correlated with the size of the sanctioner relative to the target; and negatively correlated with the economic health and political stability of the target. There is no evidence that third-country assistance to the target diminishes the effectiveness of sanctions or that the cost of sanctions to either the target or the sanctioner has a strong effect on the sanctions outcome.

Determinants of Sanctions Effectiveness: Sensitivity Analysis Using New Data

“…1 For example, Drezner (1999) and Allen (2005Allen ( , 2008 find that sanctions against allies are more likely to succeed, but Drury (1998) and Krustev and Morgan (2011) find no support for this claim, and Nooruddin (2002) and Early (2011) find that sanctions against allies are less likely to succeed for US sanctions. Even when we consider the cost of sanctions, which many see as the most important predictor of sanctions success, the empirical findings are not conclusive (Bonetti 1998;Jing, Kaempfer, and Lowenberg 2003;Nooruddin 2002).…”

“…Positive: Morgan and Schwebach (1997), Krustev (2007) McLean and Whang (2010) [+], Nooruddin (2002) Drury (1998) [0], Jing, Kaempfer and Lowenberg (2003) [−]…”

“…Negative: Morgan and Schwebach (1997), Drezner (1999) Jing, Kaempfer andLowenberg (2003) [+], Drury (1998) [0], Hufbauer et al (2007) [0], Morgan and Schwebach (1997) [−]…”

The Ruble between the Hammer and the Anvil: Oil Prices and Economic Sanctions

“…Based on a simultaneous equation approach, Jing, Kaempfer and Lowenberg (2003) argued that the success of sanctions is positively correlated with the degree of warmth in the relations between sanctioner and target prior to the sanctions, negatively with the size of the sanctioner relative to the target, and negatively with the economic health and political stability of the target.…”

Regional Sanctions Against Burundi: A Powerful Campaign and Its Unintended Consequences

“…The predominant focus on the financial impact of sanctions (for example, see Hufbauer et al 2007;Jing et al 2003;Kaempfer and Lowenberg 1999;Kaempfer et al 2004) has obscured the possibility that a state "may initiate sanctions not simply to compel action on the part of the target, but to communicate its preference, support allies, deter others from engaging in similar activity, and dissuade the target from expanding its objectionable activity" (Kirshner 1997: 34). Thus, sanctions not only coerce regimes into compliance or constrain them, but also send signals (Giumelli 2010(Giumelli , 2011) that profoundly affect domestic political struggles, particularly how the regime in power and its opponents position themselves vis-à-vis each other and the external coercion.…”