International Sanctions and Economic Development: Evidence from Latin America and the Caribbean (1950-2019)

FERNANDO ANTONIO IGNACIO GONZÁLEZ

Ankara

Congreso; IKSAD 7TH International Conference on Social Sciences & Humanities; 2021

IKSAD

This paper examines the impact of international sanctions on the economic development of sanctioned countries for the Latin American and Caribbean region over a period of more than half a century (1950-2019). The outcomes of interest include economic growth, income inequality, and the incidence and gap of poverty. The estimates arise from a two-way fixed effects model that combines data from the World Development Indicators and the Global Sanctions Database. The findings confirm a significant worsening of development in sanctioned countries. This includes lower growth (-0.6 pp) and higher inequality (+1.5 Gini coefficient points). Reduced investment as well as reduced access to credit in the private sector are the mechanisms through which the above effects take place. The results are robust to multiple specifications and have important implications for international sanctions policies.