Economic sanctions and their global spillover effects: a macroeconomic analysis

Abstract

Economic sanctions have become an essential tool of international policy, employed to influence the behavior of states without resorting to direct military intervention. However, their impact is not limited to the sanctioned country alone – in many cases, partner states also experience significant economic disruptions. Although often presented as a peaceful alternative to armed conflict, sanctions carry far-reaching economic consequences for both targeted nations and the global economy. This paper examines the multifaceted effects of economic sanctions through the lens of key case studies, including Russia. It explores how sanctions influence trade flows, currency stability, inflation, foreign investment, and long-term economic development. Particular attention is given to the ways in which sanctions destabilize financial systems and alter global supply chains. The analysis also considers unintended outcomes, such as the expansion of informal markets and emerging humanitarian concerns. By comparing the economic consequences across different cases and evaluating the international response, the paper offers a balanced perspective on the effectiveness and costs of sanctions. The findings highlight the importance of a more strategic and measured application of sanctions – one that balances political objectives with real-world economic impacts.