The Theory of International Economic Sanctions: A Public Choice Approach

Literature › Works

William H. Kaempfer; Anton D. Lowenberg (1988). The Theory of International Economic Sanctions: A Public Choice Approach. The American Economic Review, Vol. 78, No. 4 (Sep. 1988). American Economic Association.

Type	journal article
Scope	Comparative and methods
Method	theoretical or conceptual
Period studied	1986–1986
Regions	South Africa, United States, Cuba
Themes	sanctions divestment, comparative theory, politics ideology elections, business and state
Citation key	kaempfer1988

Argument

The paper rejects the 'instrumental' view that sanctions work only by imposing maximum economic harm on the target. In an interest-group (public choice) model, sanctions are shaped by pressure groups in the sanctioning country. These include import-competing producers who gain from protection and groups who want to take a moral ('expressive') stand. The resulting sanctions are therefore often deliberately mild and need not maximise damage to the target. The same framework is applied to the target country. There, sanctions change political outcomes mainly by differentially hitting supporters of the objectionable policy, by signalling foreign support to the opposition, and by threatening future pain. This can produce policy change even when the economic impact is small, and heavy damage may even strengthen the regime. South Africa and apartheid are used as the main illustration.

Evidence and method

Formal theoretical model (utility maximisation, demand curves for and against sanctions, free-rider shift parameters, two diagrams). It draws on the earlier literature on sanctions (Hufbauer and Schott, Lundborg, Porter) and on the authors' own earlier work. South Africa illustrations are brief: the 1986 U.S. sanctions package covering textiles and steel, and white workers' 'demand' for apartheid. No original empirical data.

Findings

• The level of sanctions is set by the relative political influence of interest groups, not by what would inflict maximum harm on the target. (p. 5)

  actual level of sanctions imposed by the sanctioning country is a function of the