The Causality between Economic Sanctions and Militarized Conflict: A Global Level Analysis, 1945-2014

Abstract

Sanctions and militarized disputes remain two of the most acute forms of interstate hostilities that may destabilize the contemporary interstate system. Although scholars and policy makers have discussed the potential reciprocal relationship between sanctions and conflict, extant theoretical and empirical examinations remain unsatisfactory. Their theoretical arguments are cursory and their empirical evidence is scant. How do sanctions and militarized disputes affect each other? Do more economic hostilities in the world suggest more military hostilities in the world, and vice versa? This study arranges a set of theoretical arguments for the possible causality. Using a VAR-Granger causality test method, it assesses the two-way causality at the macro-global system level for the 1945-2014 period. It also divides the entire data into the Cold War and post-Cold War samples to address a structural break. The results show that sanctions promote militarized disputes but this impact is limited to the post-Cold War era. The impact of military conflict on sanctions is insignificant with the pooled 1945-2014 sample. However, the divided samples reveal the contrasting double-faced effects for militarized disputes promoting sanctions in the Cold War era but discouraging sanctions in the post-Cold War era.