TY - JOUR
T1 - Investment, Opportunity, and Risk
T2 - Do US Sanctions Deter or Encourage Global Investment?
AU - Lektzian, David
AU - Biglaiser, Glen
PY - 2013/3
Y1 - 2013/3
N2 - Complementing the effectiveness of US sanctions debate, the US government often prods US investors to disinvest from targeted countries, hoping to pressure sanctioned countries to back US foreign policy goals or face economic costs for their actions. Missing from the effectiveness of sanctions debate is the impact US sanctions have on third-party foreign direct investment (FDI). Using panel data for 171 countries from 1969 to 2000, we present the first empirical study on the effect of sanctions on global FDI. We find strong evidence that when US firms disinvest during US sanctions, global FDI significantly increases, providing the target country with a reliable source of capital replacement. The results suggest the limited effectiveness of sanctions for restricting capital flows to targeted countries and that US firms may ultimately bear the highest costs from US-imposed sanctions.
AB - Complementing the effectiveness of US sanctions debate, the US government often prods US investors to disinvest from targeted countries, hoping to pressure sanctioned countries to back US foreign policy goals or face economic costs for their actions. Missing from the effectiveness of sanctions debate is the impact US sanctions have on third-party foreign direct investment (FDI). Using panel data for 171 countries from 1969 to 2000, we present the first empirical study on the effect of sanctions on global FDI. We find strong evidence that when US firms disinvest during US sanctions, global FDI significantly increases, providing the target country with a reliable source of capital replacement. The results suggest the limited effectiveness of sanctions for restricting capital flows to targeted countries and that US firms may ultimately bear the highest costs from US-imposed sanctions.
UR - http://www.scopus.com/inward/record.url?scp=84875592668&partnerID=8YFLogxK
U2 - 10.1111/j.1468-2478.2012.00761.x
DO - 10.1111/j.1468-2478.2012.00761.x
M3 - Article
AN - SCOPUS:84875592668
SN - 0020-8833
VL - 57
SP - 65
EP - 78
JO - International Studies Quarterly
JF - International Studies Quarterly
IS - 1
ER -