External Sector: Between Congestion and Sanctions—‘Syrian Economy Case, 1987–2018’

Abstract

Since the outbreak of the Syrian crisis in March 2011, the USA, European Union, Arab League and several other regulatory entities imposed negative economic sanctions on Syria—some of the most comprehensive ever implemented. This article first provides an assessment of Syrian foreign trade sector during the reform period of the 2000s and its impact on economic growth. Second, it estimates the impact of sanctions and conflict on the trade sector of the Syrian economy. The analysis is conducted using a panel-gravity model between Syria and 78 trading partners (1987–2017). Multilateral sanctions and conflict-related disruptions demonstrate a large significant negative impact on Syria-bilateral trade flow by 65 per cent. We attempt to find out whether the Syrian economy was able to divert trade away from Europe and/or conduct de-Europeanisation. Findings confirm that the Syrian economy was unable to divert trade flow to Asian and other countries due to the conflict-related congestion and distance factor. JEL: C33, F10