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Economic Sanctions: International Policy and Political by Robert Eyler (auth.)

By Robert Eyler (auth.)

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Sample text

In the following sections, game theoretical components are explained as extensions of the basics given earlier, where two overriding principles hold: 1. Game theory suggests that nations may seek cooperative outcomes because they lack perfect knowledge of other nations’ reactions; and 2. The political economy of national decisions may not be wellknown at the sanction’s outset. From a political economy perspective, policy shocks to wealth are assumed to define payoffs in the sanction game. There are three basic game structures for most case studies, all based on a sequential game structure.

These goods range from tractors to intellectual capital, computer software to new pharmaceutical factories. The loss of physical capital from foreign sources reduces net investment in the target’s macroeconomy. Theoretically, these sanctions threaten to slow the target’s economic growth, leading to slower savings rates, reduced GDP, and decreased consumption. Given advances in telecommunications and computer technology, trade barriers to these improvements may drive target infrastructure and capital quickly toward obsolescence.

14 Doxey (1987) made two major points that prevail in the literature today. First, sanction success must be linked with its stated or unstated purpose. The Sanction Effectiveness Continuum illustrates the possible outcomes a sanction can achieve. Economic damage is itself a “success” of sorts, as reducing target welfare is an implicit statecraft goal. How that damage exacerbates or creates problems determines if it is a humanitarian success; if the stated political goal is achieved, it is a political success.

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