Why does the termination of an economic sanctions regime frequently fail to bring about a return to pre-sanctions levels of economic activity? Existing explanations for this phenomenon have centered on the complexity of sanctions regimes or their lack of political durability and prospect for reversal, but these fail to capture the behavior of private actors such as firms, industries, and individuals. Rather, I argue that through a complex process of institutional learning at the firm level, practices and procedures become encoded and routinized within firms operating under sanctions regimes. As a result, these behaviors are standardized within firms and across industries, leading to their perpetuation even after the termination of a sanctions regime. Using probes of the plausibility of this argument that provide variation in potentially confounding factors – Great Britain's World War One-era sanctions on Germany and U.S. sanctions on Iran beginning in the mid-2000s – I find support for an explanation based on institutional learning among private actors.
John Patrick Imperiale (Thu,) studied this question.