Trade Composition and Acquiescence to Sanction Threats

Date01 September 2020
Published date01 September 2020
Subject MatterArticles
Political Research Quarterly
2020, Vol. 73(3) 526 –539
© 2019 University of Utah
Article reuse guidelines:
DOI: 10.1177/1065912919837608
Sanctions are threatened and imposed by states (send-
ers) with the aim of changing some aspect of policy or
governance of other states (targets). The loss in income
or deprivation of necessary commodities following
from sanctions are intended to produce pressure that
aligns target incentives with sender interests. As trade
itself often is the weapon of choice in sanctions epi-
sodes, it stands to reason that the composition of preex-
isting trade could be an important determinant of
whether sanctions are threatened and imposed, as well
as whether the target acquiesces to sender demands.
Previous contributions to the literature in this area focus
mainly on the how much sanction targets trade and with
whom (Dashti-Gibson, Davis, and Radcliff 1997; Drury
1998; Drury, James, and Peksen 2014; Early 2009,
2015; Morgan and Schwebach 1997; Peterson 2018, see
also Hirschman 1945; Keohane and Nye 1977; Wagner
1988)—rather than consider an important quality of
trade—its composition. In this article, we examine a
fundamental distinction between two types of trade that
occur in the contemporary global economy: inter-indus-
try trade versus intra-industry trade. The former is con-
sistent with comparative advantage and specialization as
states import and export distinct commodities—for
example, importing oil while exporting pharmaceuti-
cals—while the latter is a type of trade in which varied
consumer tastes and increasing returns to scale drive
states to export and import functionally similar, yet dif-
ferentiated goods—for example, branded vehicles or
computer software (Krugman 1979, 1981). We consider
how this basic distinction in the composition of trade
affects acquiescence to sanction threats by considering
how it corresponds to vulnerability to trade interruption.
We argue that the degree to which target trade depen-
dence on senders affects the target’s propensity to acqui-
esce to sanction threats is conditional on the composition
of target–sender trade. Greater target trade dependence is
associated with a higher probability of acquiescence under
the condition that intra-industry trade is absent, as this
condition suggests that targets will face higher (and poten-
tially asymmetric) costs from economic restriction.
However, this association diminishes toward zero as the
proportion of target–sender intra-industry trade increases
because higher IIT suggests that targets could more easily
replace lost imports with domestically produced commod-
ities. We also consider the potentially cross-cutting asso-
ciation between bilateral IIT and sanction onset. On one
hand, a higher proportion of IIT suggests that potential
targets are less vulnerable, possibly convincing would-be
837608PRQXXX10.1177/1065912919837608Political Research QuarterlyAkoto et al.
1University of South Carolina, Columbia, USA
2Arizona State University, Tempe, USA
Corresponding Author:
Timothy M. Peterson, University of South Carolina, Columbia, SC
29208, USA.
Trade Composition and Acquiescence
to Sanction Threats
William Akoto1, Timothy M. Peterson1, and Cameron G. Thies2
In this article, we argue that the composition of trade is an important determinant of vulnerability to sanctions. Trade
composition has changed considerably over the years since World War II, with growth in intra-industry trade: the
exchange of similar, often branded, commodities that follows from varied consumer preferences and economies
of scale. Conversely, we see relatively less of the traditional inter-industry trade: exchange of distinct and often
homogeneous commodities that follows from comparative advantage. We demonstrate that targets maintaining higher
proportions of intra-industry trade with senders benefit from greater resilience against economic coercion and thus
are less likely to acquiesce to sanction threats. Importantly, however, we contend that bilateral intra-industry trade
does not necessarily prevent the onset of sanction threats. Statistical tests of sanction threat cases and directed dyad-
years spanning 1962–2005 support our expectations.
sanctions, economic coercion, vulnerability, intra-industry trade

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