Economic Sanctions Generate High Costs, Especially for Target Countries’ Poorer Populations

Economic sanctions induce considerable economic damage in the target countries. Sanctions by the United Nations cause growth in sanctioned countries to decline by 2 percentage points annually. Extrapolated over ten years, this is equivalent to a 25 percent drop in per capita economic output. Unilateral sanctions by the US lead to an annual decline in growth of almost 1 percentage point in the countries affected. In the long term, this corresponds to a 13 percent slump in the economy’s output per capita.

“Economic sanctions regularly hit people who live in or close to poverty the hardest. This has been the case in the past, especially with US sanctions. Studies show, for example, that the sanctions imposed on Iran in 2012 primarily affected the country’s young, uneducated population,” says Florian Neumeier, Head of the ifo Research Group Taxation and Fiscal Policy. These figures are based on evaluations of 160 countries, of which 67 were affected by economic sanctions in the period from 1976 to 2012. “In the past, sanctions were mostly imposed on smaller economies, so we can’t deduce from the analyses how the current sanctions will affect a large economy like Russia,” Neumeier adds.

In poorer countries, economic sanctions also lead to a lower life expectancy. Sanctions by the United Nations reduce people’s life expectancy by an average of 1.2 to 1.4 years. US sanctions shorten life expectancy by almost half a year. “The distinction between male and female life expectancy also shows that women are more affected by the sanctions,” Neumeier says.

Questions can be directed to: Dr. Florian Neumeier, 0049 / 89 / 9224 1425, Neumeier@ifo.de