Trade Composition and Acquiescence to Sanction Threats

• Date: 01 September 2020
• Author: William Akoto,Timothy M. Peterson,Cameron G. Thies
• DOI: 10.1177/1065912919837608
• Published date: 01 September 2020
• Subject Matter: Articles

https://doi.org/10.1177/1065912919837608

Political Research Quarterly

2020, Vol. 73(3) 526 –539

© 2019 University of Utah

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DOI: 10.1177/1065912919837608

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Article

Introduction

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.

research-article2019

1University of South Carolina, Columbia, USA

2Arizona State University, Tempe, USA

Corresponding Author:

Timothy M. Peterson, University of South Carolina, Columbia, SC

29208, USA.

Email: timothy.peterson@sc.edu

Trade Composition and Acquiescence

to Sanction Threats

William Akoto1, Timothy M. Peterson1, and Cameron G. Thies2

Abstract

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.

Keywords

sanctions, economic coercion, vulnerability, intra-industry trade