The impact of UN and US economic sanctions on GDP growth

- Impact of UN and US economic sanctions on target states' GDP growth
- UN sanctions reduce annual real per capita GDP growth rate by more than 2 pp.
- Adverse effect lasts for a period of 10 years.
- Effect of US sanctions is smaller (0.75-1 pp) and of less duration (seven years).
- UN (US) sanctions lead to an aggregate decline in GDP of 25.5% (13.4%).

In this paper, we empirically assess how economic sanctions imposed by the United Nations and the United States affect the target states' GDP growth. Our sample includes 160 countries of which 67 experienced economic sanctions over the period 1976-2012. We find, first, that UN sanctions have a statistically and economically significant influence on the target state's economic growth. On average, the imposition of UN sanctions decreases the target state's annual real per capita GDP growth rate by more than 2 percentage points (pp). These adverse effects last for a period of 10 years and lead to an aggregate decline in the target country's GDP per capita of 25.5%. Comprehensive UN economic sanctions, that is, embargoes affecting nearly all economic activity, trigger a reduction in GDP growth by more than 5 pp. Second, the effect of US sanctions is much smaller and less distinct. The imposition of US sanctions decreases the target state's GDP growth by 0.75-1 pp. This detrimental impact on growth persists for seven years and accounts for an aggregate decline in GDP of 13.4%.