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When it comes to international economic sanctions, the most frequent goal is regime change and democratization. Yet, past experiences suggest that such sanctions are often ineffective; moreover, quite paradoxically, targeted regimes tend to respond with policies that amplify the sanctions' harmful effects. This paper offers a political-economy model which provides an explanation for these observations. An autocratic regime lowers the supply of public goods to reduce private-sector productivity and hence the resources of potential challengers. As a result, sanctions-induced challenges become less likely, thereby buying the regime time to find exile opportunities. If these opportunities turn out to be of low quality, the regime prefers to hold out — and the sanctions fail.

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