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European Peace Science Conference | Why do economic sanctions work? Do they? Will they? By Peter A.G. van Bergeijk, Binyam A. Demena, Alemayehu Reta, Gabriela Benalcazar Jativa and Patrick Kimararungu

Posted on 4 min read

Political scientists and economists claim to understand the mechanisms of economic sanctions as a tool for foreign policy and assert to have provided convincing statistical evidence for their theories. In this contribution we argue that their theories and evidence are significantly influenced by publication bias. What does this mean for our understanding of the history of economic sanctions? Further what are the implications for the future application of the sanction instrument?

Economic sanctions have become a much more important instrument in the international arena since the 1990s. Indeed, 1990 is a watershed year. It is the year that marks the fall of the Soviet Union and thereby the end of the superpower conflict that complicated United Nations security sanctions. It is the year of the sanctions against Saddam Hussain’s Iraq. Sanctions that stood out, because they were imposed within a week, truly multilateral (the first case, for example, in which Switzerland participated), and covered both trade and financial flows. Also, the imposition could and was monitored closely by means of a blockade by the navy. The sanctions against Iraq are the show case where all economic conditions for success were met. And, yet they failed.

It may of course have been the case that the goal of the sanctions was impossible to meet because giving in would mean the end (and actually the death) of the regime. So, research continued to investigate what factors are important for sanctions to be successful. We have investigated three determinants of sanctions’ success by means of a meta-analysis of thirty-six studies that were published in the period between 1985 – 2018 (most of these studies appeared in peer-reviewed journals). These determinants are trade linkage (economic sanctions do not make much sense if the sanction target and sanction sender do not trade), sanction duration (sanctions probably need to be quick and unexpected to have a maximum impact) and prior relations between sender and target (sanctions may work better against friends than foes).

Based on this, the first conclusion is that the research findings are not converging. This is illustrated in Figure 1 indicating the consensus of the literature until the turn of the millennium. It shows that the trade linkage is a determinant of sanction success, but after say 2005 the literature increasingly disagrees. We find the same pattern for both sanctions’ duration and prior relations.

Graph

Figure 1 Reported coefficients for trade linkage in 32 studies (a positive coefficient means: the study finds that more trade linkage is positively correlated with sanction success)

In our analysis, we focussed on publication bias as a potential source of the heterogeneity of the research. Publication bias may be introduced by the science publication industry. Editors and referees force scientists to look for significance and authors in a publish-or-perish-environment may be tempted to report the regression with the significant coefficient although “the other million of regressions” that they run were insignificant. Authors may also self-select because they are, for example, convinced of the need to use sanctions and therefore, want to show that sanctions work. Or they are ideologically inclined to argue against limiting international trade flows. We use meta-analysis to measure the extent of bias with respect to the findings for trade linkage, duration and prior relations. Consistently, we find a significant bias, so strong that the underlying average effect actually is zero.

Our findings fit in the so-called replication crisis that is a general and disturbing trend in science. Scientifically, this is disturbing because it hurts the credibility and reliability of our knowledge production in the hearth.

In the end, it poses a clear challenge for policy makers inclined to design evidence-based policies and an imperative question then becomes – what evidence to consider?

This contribution is based on a research project for MA students at the Institute of Social Studies for which Alemayehu Rita, Gabriela Benalcazar Jativa and Patrick Kimararungu received the Award for the best Research Paper Project 2018. It is the second article in a series related to the 19th Jan Tinbergen European Peace Science Conference that was hosted by the ISS from June 24th to 26th June 2019. Read the first article here. 

Image Credit: IsaacMao on Flickr

About the authors:

pag van bergeijkPeter van Bergeijk (www.petervanbergeijk.org) is Professor of International Economics and Macroeconomics at the ISS.

 

 

Binyam

Binyam Afewerk Demena is a Postdoctoral Researcher at the International Institute of Social Studies (ISS), Erasmus University Rotterdam (EUR). His PhD and MA in Development Economics from the ISS, EUR. His research interests relate to primary empirical research and meta-analysis in development economics, international economics, fishery economics, health economics and other related issues. He has published articles in Applied Economics, Journal of Economic Surveys, Journal of International Trade and Economic Development, and Third World Quarterly among others.

Alemahyu.jpg

Alemayehu Sisay Reta is a research assistant at the ISS. His research and professional experiences are in the areas of Development, Economics, Economic sanction, Project Feasibility Studies, Business and Economic analysis, Monitoring and Impact Evaluation and Program Development. He has an MA graduate in Economics of Development, 2018, International Institute of Social Studies of Erasmus University Rotterdam.

Gabriela

 

Gabriela Benalcazar Jativa is an MA graduate in Economics of Development, 2018, International Institute of Social Studies of Erasmus University Rotterdam. She specializes in quality assurance but she is also interested in researching issues concerning local development and meta-analysis.

Patrick

Patrick Bitandaro Kimararungu is an MA graduate in Economics of Development, 2018, International Institute of Social Studies of Erasmus University Rotterdam. Patrick’s MA thesis focused on Meta-Analysis on Economic Sanctions. His interests lie in the continuation of economic policy research especially in developing countries.

European Peace Science Conference | NEPS and the ISS Celebrate Jan Tinbergen with a Home Run by S. Mansoob Murshed

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In less than two weeks from today, the ISS will host the 19th Jan Tinbergen European Peace Science Conference, which will witness the presentation of nearly a hundred papers in quantitative conflict studies. But who was Jan Tinbergen, and why was a whole conference named after him? In the first article of our series, Mansoob Murshed sheds light on these questions.

The year 2019 marks fifty years since the Nobel Prize for Economics was instituted. The first award went to the two founding fathers of econometrics (techniques applied to empirical data to test theoretical hypotheses) namely the Dutch economist Jan Tinbergen and the Norwegian economist Ragnar Frisch. This year also happens to be a quarter of a century since the passing of Jan Tinbergen. Between 24th and 26th June, the International Institute of Social Studies (ISS) of the Erasmus University of Rotterdam (EUR) will host the 19th Jan Tinbergen European Peace Science Conference, also known as the Network of European Peace Science (NEPS) conference.

It is fitting that the Institute does so for a number of reasons. Jan Tinbergen was a founding member of the Economists for Peace and Security, and perhaps the society’s most distinguished doyen on this side of the Atlantic Ocean. Although it is well known that Professor Tinbergen enjoyed a long tenure at the Erasmus School of Economics, what is less known is that the ISS awarded him an honorary doctorate in 1962. Jan Tinbergen was a founding member of the Economists for Peace and Security. He was, incidentally, also one of the founding members of the Econometric Society back in the 1930s. Unsurprising, as he was one of the progenitors of this particular art.

Underpinning all of Tinbergen’s contributions to Economics is his desire for the usefulness of research. The extent of inequality in society during his youth in the 1920s (as is once again the case with a vengeance), as well as his first-hand experience of poverty in Leiden caused him to abandon a potentially brilliant career as a Physicist to become an Economist; Physics’ loss was Economics’ gain. He, however, brought over extensive intellectual arbitrage from Physics (and Mathematics) into Economics. Many others shared his passion for measurement, but he went to systematize it by inventing econometrics, a statistical tool that enables the testing of economic theories, and he preferred theory to be mathematical.

As such, he devised the first empirical macroeconomic model for an economy, even though the operation of the model was hampered in the case of the Netherlands by the paucity of data (unlike in the UK or USA). The 1930s was an era plagued by the scourge of mass unemployment in the industrialized world, just as nowadays the immiserisation of many at work afflicts most societies (a phenomenon otherwise known as precarious employment). Tinbergen was invited by the League of Nations to work on business cycles, because these cyclical swings were the major cause of unemployment.

At one time, Tinbergen was also the leading advisor to the League’s successor, the United Nations, on development policies, which most famously resulted in the benchmark for the quantum of development assistance to be donated by rich nations. (0.7% of national income), although Tinbergen really would have wanted more to go to poorer nations. Even more presciently, Tinbergen favoured world government, as he feared governance at the level of the nation state risked becoming myopic.[1]

Tinbergen managed to connect the inseparable concepts of welfare and security[2], as well as to formulate the notion of global security[3]. Underpinning the notion of world security is yet another inseparability between military (or security) expenditure and development assistance for poorer countries. A degree of convergence in average incomes across nations was required, and to bring that about, military expenditure needed to be curtailed so as to free up more money for aid.

It is worth reiterating Tinbergen’s commitment to the societal relevance of Economics, the need to engage in advisory work, and the overwhelming salience of finding solutions to economic problems, especially poverty and inequality between nations. His style of communication was refreshingly free of our current obsession with memes and soundbites. For all of these reasons, and more besides, it is fitting that this year’s NEPS conference, which will witness the presentation of nearly a hundred papers in quantitative conflict studies, will be held at the ISS, in the Hague, the home town of one of the pioneers of the economics of conflict, who was also one of the most ardent and distinguished champions of disarmament and development assistance.

[1] See Kol, J and P De Wolff (1993), Tinbergen’s Work: Change and Continuity, De Economist, 141.
[2] Tinbergen, J and D Fischer (1987) Warfare and Welfare, New York; St. Martin’s Press.
[3] Tinbergen, J (1990) World Security and Equity, Aldershot: Edward Elgar.

This is the first article in a series related to the 19th Jan Tinbergen European Peace Science Conference that will be hosted by the ISS from June 24th to 26th June 2019. 

Image Credit: Nationaal Archief, Den Haag, Rijksfotoarchief: Fotocollectie Algemeen Nederlands Fotopersbureau (ANEFO) under a CC license. The image was cropped.

best photoAbout the author:

S. Mansoob Murshed is Professor of the Economics of Peace and Conflict at the ISS. His research interests are in the economics of conflict, resource abundance, aid conditionality, political economy, macroeconomics and international economics.