Global Value Chains and the Productivity Costs of Sanctions

This paper studies whether participation in global value chains (GVCs) is associated with smaller productivity costs of economic sanctions. Using a panel of 111 countries over 1990–2018, we estimate fixed-effects and stacked event-study models linking total factor productivity (TFP) to sanctions exposure and GVC participation. The results show that sanctions are negatively associated with TFP only when measured along the intensive margin, using the number of sanctions received. The interaction between sanctions intensity and GVC participation is positive and significant, consistent with a buffering role of GVC integration against the productivity costs of more severe sanctions regimes.