Do Sanctions Backfire?
Evidence from the Western Economies and Russia Sanctions
The aim of this thesis is to investigate whether sanctions have a negative effect also on the sanctioning economies and not only on the targeted ones. I investigate the recent sanctions imposed by the Western Economies (i.e. Australia, Canada, the European Union and the USA) on Russia following the Crimea crisis. I collect quarterly data on industry performance, exports by products and FDI from 2010 until 2016 to study whether they are affected by sanctions. The results prove that European Union countries are somewhat negatively impacted at an industry level by the sanctions; while for the other sanctioning countries such effect is not observed. Exports are impacted as well, while FDI are not. The evidence shows that the use of external financing at country level hinders the performance of highly exposed industries to the Russia markets. However, when looking at the industry level of debt such phenomenon is not observed. Furthermore, those countries that are closely related to Russia due to historical reason benefitted from the sanctions in term of industry performance as they became more important for Russia.