| Description |
This study employs the two-stage difference-in-differences (2sDiD) estimator to investigate the causal effect of economic sanctions on political stability. It contributes by filling a gap in the literature, providing empirical evidence from 1996-2020 using a robust 2sDiD method to explore the political impact of economic sanctions, addressing concerns about the generalization of extant findings in the post-Cold War period and the limited evidence of sanctions' causal effects. The paper argues that economic sanctions impose economic hardships on the target population, causing public frustration towards their governments, which acts as a political stimulus, encouraging anti-government activities and increasing the likelihood of the target government's destabilization. However, this mechanism depends on the target’s political regime and economic globalization. Sanctions hurt democracies more than autocracies because autocrats utilize repression to suppress public expression and have higher opportunity costs for anti-government actions. Moreover, economic globalization gives targets additional alternatives to sanctioned products and services, which may weaken sanctions and negatively damage political stability in low-globalized targets more than in high-globalized ones. Empirical findings strongly support the theory from 2,951 country-year observations between 1996 and 2020 and show that economic sanctions destabilize the target's political stability, particularly in democratic and low-globalized countries.
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