IDEAS home Printed from https://ideas.repec.org/a/sae/jocore/v67y2023i2-3p266-296.html
   My bibliography  Save this article

The Effects of Economic Sanctions on Foreign Asset Expropriation

Author

Listed:
  • Hoon Lee
  • David Lektzian
  • Glen Biglaiser

Abstract

Studies suggest that home countries impose economic sanctions following host state expropriation of home firms. However, and not addressed in the empirical literature, is the possibility that sanctions lead targeted countries to nationalize firms from sender countries. Using bilateral expropriation data from 1985 to 2010, and controlling for endogeneity issues, we find that sanctions significantly increase expropriation risk, encouraging targeted states to inflict pain in a reciprocal manner on sender countries. Expropriations also enable targeted nations to acquire economic assets from foreign firms, undermining the restricting goals of sanctioning states, and provide opportunities for leaders to show political resolve at home by standing up to senders. Our results are robust using monadic or dyadic data and different statistical methods, indicating another sanction-busting strategy used by targeted countries.

Suggested Citation

  • Hoon Lee & David Lektzian & Glen Biglaiser, 2023. "The Effects of Economic Sanctions on Foreign Asset Expropriation," Journal of Conflict Resolution, Peace Science Society (International), vol. 67(2-3), pages 266-296, February.
    • Handle: RePEc:sae:jocore:v:67:y:2023:i:2-3:p:266-296
    DOI: 10.1177/00220027221118250
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/00220027221118250
    Download Restriction: no
    File URL: https://libkey.io/10.1177/00220027221118250?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. Dursun Peksen, 2019. "When Do Imposed Economic Sanctions Work? A Critical Review of the Sanctions Effectiveness Literature," Defence and Peace Economics, Taylor & Francis Journals, vol. 30(6), pages 635-647, September.
    2. Vreeland,James Raymond, 2003. "The IMF and Economic Development," Cambridge Books, Cambridge University Press, number 9780521816755.
    3. Jodice, David A., 1980. "Sources of change in Third World regimes for foreign direct investment, 1968–1976," International Organization, Cambridge University Press, vol. 34(2), pages 177-206, April.
    4. Caruso Raul, 2003. "The Impact of International Economic Sanctions on Trade: An Empirical Analysis," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 9(2), pages 1-36, April.
    5. World Bank, 2016. "World Development Indicators 2016," World Bank Publications - Books, The World Bank Group, number 23969.
    6. Kobrin, Stephen J., 1987. "Testing the bargaining hypothesis in the manufacturing sector in developing countries," International Organization, Cambridge University Press, vol. 41(4), pages 609-638, October.
    7. Bryan R. Early & Amira Jadoon, 2016. "Do Sanctions Always Stigmatize? The Effects of Economic Sanctions on Foreign Aid," International Interactions, Taylor & Francis Journals, vol. 42(2), pages 217-243, March.
    8. Vreeland,James Raymond, 2003. "The IMF and Economic Development," Cambridge Books, Cambridge University Press, number 9780521016957.
    9. Julie Jiang & Jonathan Sinton, 2011. "Overseas Investments by Chinese National Oil Companies: Assessing the Drivers and Impacts," IEA Energy Papers 2011/3, OECD Publishing.
    10. Tim Büthe & Helen V. Milner, 2008. "The Politics of Foreign Direct Investment into Developing Countries: Increasing FDI through International Trade Agreements?," American Journal of Political Science, John Wiley & Sons, vol. 52(4), pages 741-762, October.
    11. Christopher Hajzler & Jonathan Rosborough, 2016. "Government Corruption and Foreign Direct Investment Under the Threat of Expropriation," Staff Working Papers 16-13, Bank of Canada.
    12. Nathan M. Jensen & Noel P. Johnston & Chia-yi Lee & Hadi Sahin, 2020. "Crisis and contract breach: The domestic and international determinants of expropriation," The Review of International Organizations, Springer, vol. 15(4), pages 869-898, October.
    13. Kaspar Oja, 2015. "No milk for the bear: the impact on the Baltic states of Russia's counter-sanctions," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 15(1), pages 38-49.
    14. Michael S Minor, 1994. "The Demise of Expropriation as an Instrument of LDC Policy 1980-1992," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 25(1), pages 177-188, March.
    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. Gutmann, Jerg & Neuenkirch, Matthias & Neumeier, Florian, 2023. "The economic effects of international sanctions: An event study," Journal of Comparative Economics, Elsevier, vol. 51(4), pages 1214-1231.
    2. Gutmann, Jerg & Neuenkirch, Matthias & Neumeier, Florian, 2024. "Political economy of international sanctions," ILE Working Paper Series 81, University of Hamburg, Institute of Law and Economics.
    3. Gutmann, Jerg & Langer, Pascal & Neuenkirch, Matthias, 2024. "International sanctions and emigration," Journal of Economic Behavior & Organization, Elsevier, vol. 226(C).

    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. Randall Stone, 2013. "Informal governance in international organizations: Introduction to the special issue," The Review of International Organizations, Springer, vol. 8(2), pages 121-136, June.
    2. Robert G. Blanton & Bryan Early & Dursun Peksen, 2018. "Out of the shadows or into the dark? Economic openness, IMF programs, and the growth of shadow economies," The Review of International Organizations, Springer, vol. 13(2), pages 309-333, June.
    3. Baccini, Leonardo & Urpelainen, Johannes, 2012. "Strategic side payments: preferential trading agreements, economic reform, and foreign aid," LSE Research Online Documents on Economics 45057, London School of Economics and Political Science, LSE Library.
    4. Colen, Liesbeth & Persyn, Damiaan & Guariso, Andrea, 2016. "Bilateral Investment Treaties and FDI: Does the Sector Matter?," World Development, Elsevier, vol. 83(C), pages 193-206.
    5. Julia Gray & Jonathan Slapin, 2012. "How effective are preferential trade agreements? Ask the experts," The Review of International Organizations, Springer, vol. 7(3), pages 309-333, September.
    6. Takaaki Masaki & Bradley C. Parks, 2020. "When do performance assessments influence policy behavior? Micro-evidence from the 2014 Reform Efforts Survey," The Review of International Organizations, Springer, vol. 15(2), pages 371-408, April.
    7. Marijana Andrijic & Tajana Barbic, 2018. "Trick or Treat? The Effect of IMF Programmes on Mobilising FDI in CESEE Countries," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 68(3), pages 245-267, July.
    8. Thomas Stubbs & Bernhard Reinsberg & Alexander Kentikelenis & Lawrence King, 2020. "How to evaluate the effects of IMF conditionality," The Review of International Organizations, Springer, vol. 15(1), pages 29-73, January.
    9. Glen Biglaiser & Karl DeRouen, 2011. "How soon is now? The effects of the IMF on economic reforms in Latin America," The Review of International Organizations, Springer, vol. 6(2), pages 189-213, July.
    10. Gamso, Jonas & Nelson, Roy C., 2019. "Does partnering with the World Bank shield investors from political risks in less developed countries?," Journal of World Business, Elsevier, vol. 54(5), pages 1-1.
    11. Stephen Nelson, 2010. "Does compliance matter? Assessing the relationship between sovereign risk and compliance with international monetary law," The Review of International Organizations, Springer, vol. 5(2), pages 107-139, June.
    12. Glen Biglaiser & Hoon Lee & Joseph L Staats, 2017. "The effects of political and legal constraints on expropriation in natural resource and manufacturing sectors," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 20(4), pages 311-333, December.
    13. Glen Biglaiser & Hoon Lee & Joseph Staats, 2016. "The effects of the IMF on expropriation of foreign firms," The Review of International Organizations, Springer, vol. 11(1), pages 1-23, March.
    14. an de Meulen, Philipp, 2011. "Labor Heterogeneity and the Risk of Expropriation in Less Developed Countries," Ruhr Economic Papers 298, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    15. Ali Burak Güven, 2012. "The IMF, the World Bank, and the Global Economic Crisis: Exploring Paradigm Continuity," Development and Change, International Institute of Social Studies, vol. 43(4), pages 869-898, July.
    16. Patrick Hamm & David Stuckler & Lawrence King, 2006. "Mass Privatization and the Postcommunist Mortality Crisis," Working Papers wp118, Political Economy Research Institute, University of Massachusetts at Amherst.
    17. Daoud, Adel & Johansson, Fredrik, 2019. "Estimating Treatment Heterogeneity of International Monetary Fund Programs on Child Poverty with Generalized Random Forest," SocArXiv awfjt, Center for Open Science.
    18. Adelaide Baronchelli & Raul Caruso & Roberto Ricciuti, 2022. "Trade in Small Arms and Light Weapons: Are embargoes effective?," The World Economy, Wiley Blackwell, vol. 45(5), pages 1336-1361, May.
    19. Bumba Mukherjee & Benjamin E. Bagozzi, 2013. "The IMF, Domestic Public Sector Banks, and Currency Crises in Developing States," International Interactions, Taylor & Francis Journals, vol. 39(1), pages 1-29, January.
    20. Mr. Eugenio M Cerutti, 2007. "IMF Drawing Programs: Participation Determinants and Forecasting," IMF Working Papers 2007/152, International Monetary Fund.

    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:jocore:v:67:y:2023:i:2-3:p:266-296. 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.