ECONOMIC SANCTIONS: THEORY, POLICY, MECHANISMS

Abstract

The purpose of the article is to analyze the theory and practice of international economic sanctions. The application of international economic sanctions and debate about their effectiveness and scale of losses are now at the centre of international politics. Analysis of key factors, mechanisms and socio-economic consequences of economic sanctions in the world economy need a conceptual understanding. The subject of the research is international economic sanctions. According to known practice, economic sanctions policy is based largely on the discretionary approach of using, as required, a policy of rigid rules, which is clearly reflected in the mechanisms, means and instruments of its practical implementation. Economic sanctions are the integral part of international economic policy, implemented through the theory of public (rational) choice, structural theory (cost-issue model), decision-making theory, the theory of coordination and cooperative games, etc. The hierarchical nature of the mechanism for the application of sanctions is available in three main levels: global, regional and national. There are three types of economic sanctions: trade, investment or financial ones, and so-called targeted sanctions or “smart” sanctions (transportation and communications restrictions). The case of introduction of economic sanctions, especially by supranational bodies of international integration organisations, namely the EU, is of particular importance for economic policy coordination. The specific consequences of imposing economic sanctions take on various socio-economic dimensions, the main ones of them indeed being the economic growth rates. The economic sanctions demonstrate how the individual countries, regional and international organizations react on huge violations of human rights, sovereignty of countries, international law in general. Methodological basis of the research comprise the list of theoretical and empirical methods of research; in article, the analysis of recent research publications subject under the discussion has been provided, the results obtaining with statistical data have been compared, the practical recommendations, received on the base of survey results have been suggested. To examine how the Iranian economy responds to sanctions imposed by the US and other countries we have constructed vector autoregression model. To test the variables of the model for unit root we have used augmented Dickey-Fuller, Phillips-Perron and Kwiatkowski–Phillips–Schmidt–Shin criteria, which have shown that almost half of the indicators are first-order integrated, with the rate of inflation and investment, in relation to GDP, GDP growth rate, imports of goods and services and oil rent are stationary, that is zero-order integrated. The US sanctions have increased oil price fluctuations in the Middle East region. The results of the study have shown that economic sanctions nowadays are a comprehensive tool in global economic wars, which effectiveness largely depends on the ratio of the economic power of the sanction imposing country to the sanctioned one.