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Hot Spots Around the World

Paper Session

Saturday, Jan. 7, 2023 8:00 AM - 10:00 AM (CST)

New Orleans Marriott, Preservation Hall Studio 10
Hosted By: Peace Science Society International
  • Chair: Carlos Seiglie, Rutgers University

Economic Sanctions against North Korea: Theory and Evidence from Satellite Nighttime Lights

Youngseok Park
,
Korea Institute for International Economic Policy

Abstract

The United Nations Security Council adopted eight resolutions from 2012 to 2019, in condemning threatening actions on the part of North Korea, such as conducting ballistic missiles and nuclear weapons tests. I examine the efficacy of sanctions against North Korea using satellite nighttime lights data. The political system of North Korea is defined as suryong dictatorship, in which the dictator (supreme leader or suryong) holds absolute power to dictate the country’s resources. Suryong allocates large enough fraction of the country’s resources to the selectorate for supporting his political power. I empirically test the theoretical hypothesis - the ruler will transfer a greater fraction of the country’s resources to the selectorate as sanctions intensify - using satellite nighttime lights data. I find that an additional sanction is associated with an increase in the difference in nighttime lights between the capital city, Pyongyang, and the rest of the country by about 0.4 percent. Manufacturing cities, mining areas, the Chinese border region, and Sinuiju become relatively brighter with an additional sanctions event. Another notable finding is the estimate on the interaction term with the nuclear development facilities areas, which suggests that the ruler diverts resources and electricity from nuclear development activities to other sectors when sanctions increase

Red Scare? A Study of Ethnic Prejudice in the Prosecutions under the Economic Espionage Act

Hanming Fang
,
University of Pennsylvania
Ming Li
,
Chinese University of Hong Kong

Abstract

We empirically test whether the Department of Justice (DOJ) engages in ethnic prejudice against Chinese in its prosecutorial decisions under the Economic Espionage Act (EEA) of 1996. Using data of EEA cases from November 1996 to June 2021, we conduct Becker’s outcome test for evidence of ethnic prejudice. We find that Chinese-named defendants were more likely to be dismissed by trial or acquitted by jury, and were found guilty on fewer counts, and on average received harsher indictments. These results are robust regardless of whether we consider all cases or only arguably “marginal” cases. We also find that, for those publicly listed victim firms whose trade secrets were allegedly stolen by the charged defendants, the stock market reaction was much more muted to the news on the case filing date if the charged defendants are of Chinese descent. Our study provides the first systematic evidence that the DOJ’s prosecutorial decisions in the application of the EEA may have been tainted by ethnic prejudice against Chinese, including American citizens of Chinese descent.

Identifying the Effects of Sanctions on the Iranian Economy Using Newspaper Coverage

Dario Laudati
,
University of Southern California
M. Hashem Pesaran
,
University of Southern California and University of Cambridge

Abstract

This paper focuses on the identification and quantitative estimation of sanctions on the Iranian economy over the period 1989–2019. It provides a new time series approach and proposes a novel measure of sanctions intensity based on daily newspaper coverage. In absence of sanctions, Iran’s average annual growth could have been around 4-5 per cent, as compared to the 3 per cent realized. Estimates of the proposed sanctions-augmented structural VAR show that sanctions significantly decrease oil export revenues, result in substantial depreciation of Iranian rial, followed by subsequent increases in inflation and falls in output growth. Keeping other shocks fixed, two years of sanctions can explain up to 60 per cent of output growth forecast error variance, although a single quarter sanction shock proves to have quantitatively small effects.

Information Operations Increase Civilian Security Cooperation

Konstantin Sonin
,
University of Chicago
Austin L. Wright
,
University of Chicago

Abstract

Information operations are considered a central element of modern warfare and counterinsurgency, yet there remains little systematic evidence of their effectiveness. Using a geographic quasi-experiment conducted during Operation Enduring Freedom in Afghanistan, we demonstrate that civilians exposed to the government's information campaign resulted in more civilian security cooperation, which in turn increased bomb neutralizations. These results are robust to a number of alternative model specifications that account for troop presence, patrol-based operations, and local military aid allocation as well as a series of novel placebo tests and latent radio signal propagation approaches. The paper demonstrates that information campaigns can lead to substantive attitudinal and behavioral changes in an adversarial environment and substantially improve battlefield outcomes.

Discussant(s)
Solomon W. Polachek
,
SUNY-Binghamton
Jun Xiang
,
Rutgers University
Wei Xiao
,
SUNY-Binghamton
David Slichter
,
SUNY-Binghamton
JEL Classifications
  • F5 - International Relations, National Security, and International Political Economy
  • H5 - National Government Expenditures and Related Policies