Are Export Sanctions Effective?

Milton Friedman said “all in all, economic sanctions are not an effective weapon of political warfare." This statement is not necessarily always true. When assessing the effectiveness of economic (i.e., export, import, financial, and banking) sanctions, it is important to distinguish between their different types. Economic sanctions are heterogeneous by definition, and their impacts should not be stereotyped. In this policy brief, which is based on a new research paper (Haidar, forthcoming), I highlight effects of a specific type of sanctions: export sanctions.

Export sanctions continue to be used by countries while attempting to change the behavior of other governments. And, they still surface at the center of current policy debates when it comes to Iran. However, we still lack complete understanding about the impact and effectiveness of export sanctions.

In a nutshell:

• Different countries impose export sanctions.
• Whether these sanctions are effective depends on their goal. This policy brief highlights that, if the goal of export sanctions is to reduce total exports of the targeted country, export sanctions may be less effective as exporters can redirect their exports from one export destination to another.
• However, if the goal of export sanctions is to put pressure on exporters in the targeted country, then export sanctions can be effective as exporters incur welfare losses while deflecting exports to new destinations.

Download the full policy brief here.