Factors influencing the outcome of economic sanctions

Abstract

This paper draws from two unpulished articles with the same title, Wold (1978, 1980), the first (5 pages) presented at the International Workshop on Conflict Resolution, University of Haifa, Israel, 19-24 june 1978, the second (28 pages) at the Fourth World Congress of Econometric Society, Aix-en-Provence, 21 Aug.-1 Sept. 1980. For considerations of space the present paper is in cable style. As an exercise in scientific model building the analysis is extreme in using 27 variables (factors) to explain or predict the outcome of ten cases of economic sactions. The exposition quotes the basic data compiled by Peter Wallensteen (1968, 1971) and then focuses on Partial Least Squares (PLS) models and their estimation by PLS Mode A, and on the model evaluation by Stone-Geisser's cross-validation test for predictive relevance. The evaluation is open-ended, and some further evolution of the model is discussed. In the interwar period 1918-38 the lively discussion in political science was very much induced by the article in the constitution of the League of Nations where, as paraphrased by Wallensteen, economic sanctions were seen as the only rational instrument to prevent war. In the 1960's it was no longer believed that economic sanctions can prevent or replace war; the focus is instead on social systems that are regarded as non-desirable, and the hope of many is to change these systems at the lowest possible price by means of economic sanctions. With reference to these two stages of the debate the main purpose of Wallensteen's thesis is to confront the various proposed ideas with historical material.