MINERVA, ASSESSING THE IMPACT OF ECONOMIC SANCTIONS ON ECONOMIC INTERDEPENDENCIES BETWEEN NATIONS
Abstract
The international community generally relied on sanctions (e.g., tariffs, embargos, etc.) and otherforms of economic coercion as a means short of war for discouraging rouge nations from, or punishingthem for violating international norms. Over the past two decades, however, acts of economic coercionhave been increasingly used by economically powerful nations such as China and Russia to advance theirown financial, national security and-or geopolitical interests over the interests of nations they trade with.This heightened use economic coercion threatens to Balkanize the global economic interdependencies thathave advanced between nations under the international order of free and open trade that the U.S. hashelped champion, nurture and protect since the end of WWII, a period of general global peace andstability. To better understand the destabilizing effects that economic coercion could have on theinternational order, we propose to conduct a novel analysis of the sensitivity exhibited by economicinterconnections between nations to major international sanctions over the past two and a half decades.We will do so using a new form of economic input-output (IO) tables that we have developed as part ofour now-ending Minerva project (N00014-17-1-2311), which we call hybrid IO (HIO) tables. Atraditional IO table for the world, such as the Eora Multiregional IO (MRIO) tables, tabulates the annualflows of income for goods and services between major economic sectors (26 in the Eora MRIO tables)within (i.e., domestic production and consumption) and among (i.e., trade) the world’s nations. We drawon multiple databases (e.g., IEA world annual energy balances and the CEPII BACI bilateral trade data)to expand these tables to also contain annual global flows of 13 different energy types, including theflows of absolute energy between nations and the flows of energy into each nation’s non-energy sectors,thereby capturing the dependence of that nation’s sector on specific energy types including the amountsthat come from imports. In this analysis, we will sequentially stack our annual world HIO tables for 1990-2015 into a HIO data cube (HIO-DC) so as to provide a longitudinal dimension to the cross-sectionaldimension of integrated trade and economic domestic activity already captured in the HIO tables. Thiswill enable us to not only examine but quantify the evolution of the economic activity within and betweennations, including the manner in which this evolution has been altered by and responded to economicstresses. The specific stresses that we will focus on are major international sanctions levied during thestudy period, such as the U.S., EU and UN sanctions imposed on Iran between 2006-2015. As wedemonstrate in our proposal, these types of stresses can lead to a reshuffling of global trading activity thatextends beyond the sanction-targeted nation and its immediate trading partners to include other nationswith exports and imports that shift to fill voids in supply and demand created by the sanctions. To ourknowledge, economic analysis of sanctions has never been done before using MRIO, and our use of aHIO-DC for this purpose will be completely new. We anticipate that general data analysis of the HIO-DCwill yield significant new insights as to the manner, magnitude and scope to which sanctions affectinternational interdependencies. We will also use sophisticated feature extraction techniques on the HIODCin an attempt to visually map out the extent to which sanction impacts expand beyond the economy ofthe target nation to infiltrate other nations’ economies. Furthermore, we analyze the HIO-DC usingstructural trade methods in an attempt to measure the inertia of trade flows and thus their resiliency toeconomic coercion and project their possible future trajectories.
Document Details
- Document Type
- DoD Grant Award
- Publication Date
- Mar 07, 2023
- Source ID
- FA95502110156
Entities
People
- Lincoln Pratson
Organizations
- Air Force Office of Scientific Research
- Duke University
- United States Air Force