Scientific Journal SPATIAL ECONOMICS - Trade and Investment Interactions in the Asia-Pacific Region: Long-Term Effects of Sanctions

In the section	Articles
Title of the article	Trade and Investment Interactions in the Asia-Pacific Region: Long-Term Effects of Sanctions
Pages	42-71
Author	Dmitriy Aleksandrovich Izotov Doctor of Economics, Leading Research Fellow Economic Research Institute FEB RAS 153 Tikhookeanskaya St., Khabarovsk, 680042, Russian Federation This email address is being protected from spambots. You need JavaScript enabled to view it. ORCID: 0000-0001-9199-6226
Abstract	The Asia-Pacific region (APR) is the largest sub-global economy, accounting for a large share of global trade and direct investment flows, where the major role is played by intraregional economic interactions. The expansion of trade and investment in the APR has been hampered by sanctions, the number of which has increased significantly over the past decade. The aim of this study is to assess the long-term cumulative effects of sanctions on trade and investment interactions between the APR countries in 1992–2023. The study examined trade sanctions, financial sanctions, travel sanctions, arms sanctions, military aid sanctions, and other sanctions reflected in the Global Sanctions Data Base (GSDB). Based on the estimates obtained, it was found that sanctions generally restrained the exchange of goods (by 31.5%) and capital (by 34.3%) between the APR countries. The negative effect of specific types of sanctions that were geopolitically oriented was the most significant in reducing trade between opposing countries: other sanctions – by 77.2%, arms sanctions – by 50.9%, military aid sanctions – by 46.4%. On average, trade sanctions reduced trade by 28.4% over the period, while the impact of other types of sanctions on trade in the APR was statistically insignificant. The following types of sanctions had a negative impact on foreign direct investment (FDI) inflows: travel sanctions – by 91.6%, other sanctions – by 83.9%, and financial sanctions – by 54.5%. The remaining sanctions did not have a significant impact on capital inflows in the Asia-Pacific region. The calculations showed that the effect of globalization generally offset the impact of sanctions on trade between Asia-Pacific countries, but depended on the specific type of restrictions. In turn, the effect of globalization did not have a significant impact on mitigating the negative impact of sanctions on FDI inflows to the APR countries. This circumstance indicates that, unlike trade, FDI inflows to the APR countries were much more vulnerable to sanctions. This significantly narrows the opportunities for sanctioned countries to attract direct capital, which can be replaced by responsible investments through net exports
Code	339+338+330
JEL	E23, F14, F21, F51
DOI	https://dx.doi.org/10.14530/se.2025.3.042-071
Keywords	trade, foreign direct investment, sanctions, trade sanctions, financial sanctions, travel sanctions, arms sanctions, military assistance sanctions and other sanctions, trade and investment barriers, globalization effect, APR
Download	SE.2025.3.042-071.Izotov.pdf
For citation	Izotov D.A. Trade and Investment Interactions in the Asia-Pacific Region: Long-Term Effects of Sanctions. Prostranstvennaya Ekonomika = Spatial Economics, 2025, vol. 21, no. 3, pp. 42 - 71. https://dx.doi.org/10.14530/se.2025.3.042-071 (In Russian)
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Submitted	10.08.2025
Approved after reviewing	28.08.2025
Accepted for publication	29.08.2025
Available online	30.09.2025