Correlation Between Sending Sanctions and the Development of the Sanctioning Country’s Economy

Abstract: Economic sanctions are a tool of achieving peace and have become increasingly important in research lately, as it is a more current question than ever. With the Russian war on Ukraine, countries have been sending sanctions in the hopes of financially straining Russia. The purpose of the study is to investigate how sending sanctions to a main trading partner is associated with the economic development of the sender. The study was based on the gravity model as well as economic development determinants. We employed a panel data analysis regarding 19 countries. A Fixed Effect model was used in order to regress the relationship between sending sanctions and the economic development of the sanctioning states economy between the years 1990 and 2021. At a 5% significance level, we did not find any correlation between annual growth of Gross Domestic Product per capita and sanctioned years, however the findings showed that there was a statistically significant negative correlation between sending sanctions and the economic growth of the sender at a 10% significance level. Governmental institutions can use these findings to carefully consider sanction decisions and their potential impact on the economy in the future.