IDEAS home Printed from https://ideas.repec.org/a/sae/compsc/v37y2020i6p674-693.html
   My bibliography  Save this article

Economic sanctions and income inequality: impacts of trade restrictions and foreign aid suspension on target countries

Author

Listed:
  • Jin Mun Jeong

Abstract

This research examines the relationship between economic sanctions and income inequality of sanctioned states. Economic sanctions have a discernible effect on target income inequality. I argue that such an effect significantly varies across sanctions instruments and economic conditions of sanctioned countries. Data analysis for 152 countries from 1974 to 2011 shows that import sanctions increase inequality of labor-abundant targets, but such an effect disappears in labor-scarce targets, whereas the findings provide no reliable evidence for the effect of export sanctions. The results also suggest that foreign aid sanctions reduce the inequality of targets that are significantly dependent on foreign assistance.

Suggested Citation

  • Jin Mun Jeong, 2020. "Economic sanctions and income inequality: impacts of trade restrictions and foreign aid suspension on target countries," Conflict Management and Peace Science, Peace Science Society (International), vol. 37(6), pages 674-693, November.
    • Handle: RePEc:sae:compsc:v:37:y:2020:i:6:p:674-693
    DOI: 10.1177/0738894219900759
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0738894219900759
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0738894219900759?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Dong-Hun Kim, 2013. "Coercive Assets? Foreign Direct Investment and the Use of Economic Sanctions," International Interactions, Taylor & Francis Journals, vol. 39(1), pages 99-117, January.
    2. Neuenkirch, Matthias & Neumeier, Florian, 2016. "The impact of US sanctions on poverty," Journal of Development Economics, Elsevier, vol. 121(C), pages 110-119.
    3. Alesina, Alberto & Dollar, David, 2000. "Who Gives Foreign Aid to Whom and Why?," Journal of Economic Growth, Springer, vol. 5(1), pages 33-63, March.
    4. Molenaers, N. & Gagiano, A. & Smets, L. & Dellepiane, S., 2015. "What Determines the Suspension of Budget Support?," World Development, Elsevier, vol. 75(C), pages 62-73.
    5. P. A. Black & H. Cooper, 1987. "On the Welfare and Employment Effects of Economic Sanctions," South African Journal of Economics, Economic Society of South Africa, vol. 55(1), pages 1-8, March.
    6. Simone Dietrich & Amanda Murdie, 2017. "Human rights shaming through INGOs and foreign aid delivery," The Review of International Organizations, Springer, vol. 12(1), pages 95-120, March.
    7. Dirk-Jan Koch & Judith Westeneng & Ruerd Ruben, 2007. "Does Marketisation of Aid Reduce the Country-level Poverty Targeting of Private Aid Agencies?," The European Journal of Development Research, Taylor and Francis Journals, vol. 19(4), pages 636-657.
    8. World Bank, 2015. "World Development Indicators 2015," World Bank Publications - Books, The World Bank Group, number 21634.
    9. Feenstra, Robert C. & Hanson, Gordon H., 1997. "Foreign direct investment and relative wages: Evidence from Mexico's maquiladoras," Journal of International Economics, Elsevier, vol. 42(3-4), pages 371-393, May.
    10. North, Douglass C. & Weingast, Barry R., 1989. "Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England," The Journal of Economic History, Cambridge University Press, vol. 49(4), pages 803-832, December.
    11. Findley, Michael G. & Harris, Adam S. & Milner, Helen V. & Nielson, Daniel L., 2017. "Who Controls Foreign Aid? Elite versus Public Perceptions of Donor Influence in Aid-Dependent Uganda," International Organization, Cambridge University Press, vol. 71(4), pages 633-663, October.
    12. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
    13. Daniel Hoechle, 2007. "Robust standard errors for panel regressions with cross-sectional dependence," Stata Journal, StataCorp LP, vol. 7(3), pages 281-312, September.
    14. Frederick Solt, 2008. "Economic Inequality and Democratic Political Engagement," American Journal of Political Science, John Wiley & Sons, vol. 52(1), pages 48-60, January.
    15. Afesorgbor, Sylvanus Kwaku & Mahadevan, Renuka, 2016. "The Impact of Economic Sanctions on Income Inequality of Target States," World Development, Elsevier, vol. 83(C), pages 1-11.
    16. Anna Fruttero & Varun Gauri, 2005. "The Strategic Choices of NGOs: Location Decisions in Rural Bangladesh," Journal of Development Studies, Taylor & Francis Journals, vol. 41(5), pages 759-787.
    17. Tierney, Michael J. & Nielson, Daniel L. & Hawkins, Darren G. & Roberts, J. Timmons & Findley, Michael G. & Powers, Ryan M. & Parks, Bradley & Wilson, Sven E. & Hicks, Robert L., 2011. "More Dollars than Sense: Refining Our Knowledge of Development Finance Using AidData," World Development, Elsevier, vol. 39(11), pages 1891-1906.
    18. Briggs, Ryan C., 2018. "Poor targeting: A gridded spatial analysis of the degree to which aid reaches the poor in Africa," World Development, Elsevier, vol. 103(C), pages 133-148.
    19. Wolfgang F. Stolper & Paul A. Samuelson, 1941. "Protection and Real Wages," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 9(1), pages 58-73.
    20. Boone, Peter, 1996. "Politics and the effectiveness of foreign aid," European Economic Review, Elsevier, vol. 40(2), pages 289-329, February.
    21. Gary Clyde Hufbauer & Jeffrey J. Schott & Kimberly Ann Elliott, 2009. "Economic Sanctions Reconsidered, 3rd Edition (paper)," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 4129, April.
    22. Zhu, Susan Chun & Trefler, Daniel, 2005. "Trade and inequality in developing countries: a general equilibrium analysis," Journal of International Economics, Elsevier, vol. 65(1), pages 21-48, January.
    23. Kenneth L. Sokoloff & Stanley L. Engerman, 2000. "Institutions, Factor Endowments, and Paths of Development in the New World," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 217-232, Summer.
    24. Ryan C. Briggs, 2015. "The Influence of Aid Changes on African Election Outcomes," International Interactions, Taylor & Francis Journals, vol. 41(2), pages 201-225, March.
    25. P. A. Black & J. H. Cooper, 1987. "On the Welfare and Employment Effects of Economic Sanctions: Reply," South African Journal of Economics, Economic Society of South Africa, vol. 55(3), pages 196-197, September.
    26. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
    27. Frederick Solt, 2016. "The Standardized World Income Inequality Database," Social Science Quarterly, Southwestern Social Science Association, vol. 97(5), pages 1267-1281, November.
    28. Winters, Matthew S. & Martinez, Gina, 2015. "The Role of Governance in Determining Foreign Aid Flow Composition," World Development, Elsevier, vol. 66(C), pages 516-531.
    29. Haley J. Swedlund, 2017. "Can foreign aid donors credibly threaten to suspend aid? Evidence from a cross-national survey of donor officials," Review of International Political Economy, Taylor & Francis Journals, vol. 24(3), pages 454-496, May.
    30. Ryan C. Briggs, 2018. "Leaving No One Behind? A New Test of Subnational Aid Targeting," Journal of International Development, John Wiley & Sons, Ltd., vol. 30(5), pages 904-910, July.
    31. Nunnenkamp, Peter & Weingarth, Janina & Weisser, Johannes, 2009. "Is NGO aid not so different after all? Comparing the allocation of Swiss aid by private and official donors," European Journal of Political Economy, Elsevier, vol. 25(4), pages 422-438, December.
    32. World Bank, 2017. "World Development Indicators 2017," World Bank Publications - Books, The World Bank Group, number 26447.
    33. Dursun Peksen & A. Cooper Drury, 2010. "Coercive or Corrosive: The Negative Impact of Economic Sanctions on Democracy," International Interactions, Taylor & Francis Journals, vol. 36(3), pages 240-264, August.
    34. Briggs, Ryan C., 2017. "Does Foreign Aid Target the Poorest?," International Organization, Cambridge University Press, vol. 71(1), pages 187-206, January.
    35. Mani Nepal & Alok K. Bohara & Kishore Gawande, 2011. "More Inequality, More Killings: The Maoist Insurgency in Nepal," American Journal of Political Science, John Wiley & Sons, vol. 55(4), pages 886-906, October.
    36. Gary Clyde Hufbauer & Jeffrey J. Schott & Kimberly Ann Elliott, 2007. "Economic Sanctions Reconsidered, 3rd edition (hardcover)," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 4075, January.
    37. John S. Ahlquist & Erik Wibbels, 2012. "Riding the Wave: World Trade and Factor‐Based Models of Democratization," American Journal of Political Science, John Wiley & Sons, vol. 56(2), pages 447-464, April.
    38. Santanu Chatterjee & Stephen J. Turnovsky, 2005. "Financing Public Investment through Foreign Aid: Consequences for Economic Growth and Welfare," Review of International Economics, Wiley Blackwell, vol. 13(1), pages 20-44, February.
    39. Brambor, Thomas & Clark, William Roberts & Golder, Matt, 2006. "Understanding Interaction Models: Improving Empirical Analyses," Political Analysis, Cambridge University Press, vol. 14(1), pages 63-82, January.
    40. Abdul-Gafaru Abdulai & David Hulme, 2015. "The Politics of Regional Inequality in Ghana: State Elites, Donors and PRSPs," Development Policy Review, Overseas Development Institute, vol. 33(5), pages 529-553, September.
    41. Peter Nunnenkamp & Hannes Öhler & Maximiliano Sosa Andrés, 2017. "Need, Merit and Politics in Multilateral Aid Allocation: A District†level Analysis of World Bank Projects in India," Review of Development Economics, Wiley Blackwell, vol. 21(1), pages 126-156, February.
    42. Bjørnskov, Christian, 2010. "Do elites benefit from democracy and foreign aid in developing countries?," Journal of Development Economics, Elsevier, vol. 92(2), pages 115-124, July.
    43. Meschi, Elena & Vivarelli, Marco, 2009. "Trade and Income Inequality in Developing Countries," World Development, Elsevier, vol. 37(2), pages 287-302, February.
    44. de Mesquita, Bruce Bueno & Smith, Alastair, 2009. "A Political Economy of Aid," International Organization, Cambridge University Press, vol. 63(2), pages 309-340, April.
    45. A. Cooper Drury & Patrick James & Dursun Peksen, 2014. "Neo-Kantianism and Coercive Diplomacy: The Complex Case of Economic Sanctions," International Interactions, Taylor & Francis Journals, vol. 40(1), pages 25-51, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jakub Horak, 2021. "Sanctions as a Catalyst for Russia’s and China’s Balance of Trade: Business Opportunity," JRFM, MDPI, vol. 14(1), pages 1-26, January.
    2. Jun Wen & Xinxin Zhao & Quan-Jing Wang & Chun-Ping Chang, 2021. "The impact of international sanctions on energy security," Energy & Environment, , vol. 32(3), pages 458-480, May.
    3. Raul Caruso & Maria Cipollina, 2023. "The Effect of Economic Sanctions on World Trade of Mineral Commodities. A Gravity Model Approach from 2009 to 2020," DISCE - Quaderni del Dipartimento di Politica Economica dipe0034, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    4. Olivier Bertrand & Marie-Ann Betschinger, 2024. "Exploring the relationship between development aid and FDI from developed countries in developing countries: empirical insights from Japanese firm-level data," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 55(6), pages 782-795, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dreher, Axel & Lang, Valentin & Reinsberg, Bernhard, 2024. "Aid effectiveness and donor motives," World Development, Elsevier, vol. 176(C).
    2. Dipendra, K.C., 2020. "Which aid targets poor at the sub-national level?," World Development Perspectives, Elsevier, vol. 17(C).
    3. Florian Dorn & Clemens Fuest & Niklas Potrafke, 2022. "Trade openness and income inequality: New empirical evidence," Economic Inquiry, Western Economic Association International, vol. 60(1), pages 202-223, January.
    4. Siri Aas Rustad & Kristian Hoelscher & Andreas Kotsadam & Gudrun Østby & Henrik Urdal, 2024. "Does development aid reach politically excluded groups? A Disaggregated Study of the Location of Aid in Sub‐Saharan Africa," Development Policy Review, Overseas Development Institute, vol. 42(3), May.
    5. Elisabeth Lio Rosvold, 2020. "Disaggregated determinants of aid: Development aid projects in the Philippines," Development Policy Review, Overseas Development Institute, vol. 38(6), pages 783-803, November.
    6. Tobias Heinrich & Yoshiharu Kobayashi, 2022. "Evaluating explanations for poverty selectivity in foreign aid," Kyklos, Wiley Blackwell, vol. 75(1), pages 30-47, February.
    7. Toke S. Aidt & Facundo Albornoz & Esther Hauk, 2021. "Foreign Influence and Domestic Policy," Journal of Economic Literature, American Economic Association, vol. 59(2), pages 426-487, June.
    8. Herzer, Dierk & Nunnenkamp, Peter, 2012. "The effect of foreign aid on income inequality: Evidence from panel cointegration," Structural Change and Economic Dynamics, Elsevier, vol. 23(3), pages 245-255.
    9. Onialisoa Mirana Rakotoarivelo & Hanitriniaina Sammy Gr´egoire Ravelonirina, 2019. "On the Dynamic of Country Development," Journal of Mathematics Research, Canadian Center of Science and Education, vol. 11(2), pages 1-19, April.
    10. Angelika J. Budjan & Andreas Fuchs, 2021. "Democracy and Aid Donorship," American Economic Journal: Economic Policy, American Economic Association, vol. 13(4), pages 217-238, November.
    11. Hrushikesh Mallick & Mantu Kumar Mahalik & Hemachandra Padhan, 2020. "Does globalization exacerbate income inequality in two largest emerging economies? The role of FDI and remittances inflows," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 67(4), pages 443-480, December.
    12. Zhang, Liyunpeng & Zhuang, Yuhang & Ding, Yibing & Liu, Ziwei, 2023. "Infrastructure and poverty reduction: Assessing the dynamic impact of Chinese infrastructure investment in sub-Saharan Africa," Journal of Asian Economics, Elsevier, vol. 84(C).
    13. Axel Dreher & Florian Mölders & Peter Nunnenkamp, 2010. "Aid Delivery through Non‐governmental Organisations: Does the Aid Channel Matter for the Targeting of Swedish Aid?," The World Economy, Wiley Blackwell, vol. 33(2), pages 147-176, February.
    14. Zhang, Liyunpeng & Li, Xiao & Zhuang, Yuhang & Li, Ningning, 2022. "World Bank aid and local multidimensional poverty in Sub-Saharan Africa," Economic Modelling, Elsevier, vol. 117(C).
    15. Lauren L. Ferry & Emilie M. Hafner-Burton & Christina J. Schneider, 2020. "Catch me if you care: International development organizations and national corruption," The Review of International Organizations, Springer, vol. 15(4), pages 767-792, October.
    16. Asmus, Gerda & Eichenauer, Vera & Fuchs, Andreas & Parks, Bradley, 2021. "Does India use development finance to compete with China? A subnational analysis," Kiel Working Papers 2189, Kiel Institute for the World Economy (IfW Kiel).
    17. repec:elg:eechap:15325_15 is not listed on IDEAS
    18. Asiedu, Edward & Sadekla, Sylvester S. & Bokpin, Godfred A., 2020. "Aid to Africa’s agriculture towards building physical capital: Empirical evidence and implications for post-COVID-19 food insecurity," World Development Perspectives, Elsevier, vol. 20(C).
    19. Toke S. Aidt & Facundo Albornoz & Esther Hauk, 2019. "Foreign in influence and domestic policy: A survey," Cambridge Working Papers in Economics 1928, Faculty of Economics, University of Cambridge.
    20. Albers, Thilo N.H. & Jerven, Morten & Suesse, Marvin, 2023. "The Fiscal State in Africa: Evidence from a Century of Growth," International Organization, Cambridge University Press, vol. 77(1), pages 65-101, January.
    21. Young Eun Kim & Norman V. Loayza, 2019. "Productivity Growth: Patterns and Determinants across the World," Revista Economía, Fondo Editorial - Pontificia Universidad Católica del Perú, vol. 42(84), pages 36-93.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:compsc:v:37:y:2020:i:6:p:674-693. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://pss.la.psu.edu/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.