Working out if sanctions are effective is difficult because those sanctioned tend to be secretive in terms of their response; Iran and N. Korea for example.
China however was hit in 2007 by the ‘China Military Catch-All Rule’ from the United States and because sanctioned products were clearly identified it’s been possible to follow up with the consequences for those on the receiving end of the specific product restrictions.
Xueyue Liu from the Fudan University, with help from researchers at his institution, MIT and the Harvard Business School, note the use of sanctions has increased significantly in recent years but governments are mostly flying blind in terms of understanding their effects.
There are necessary caveats about effects elsewhere but the China response has been crystal clear and I’ll leave it to the analysts to recap:
“Treated firms sharply reduced imports of controlled products and increased innovation activity: R&D spending rose by 49.1%, patenting by 41.3%, and the number of active inventors by 30.4%. Patenting in related technologies increased by 65.1% and patents on other topics increased by 41.6%, indicating a broad innovation response rather than one narrowly focused on replacing restricted inputs.” [My bold and italics]
Followers of China’s innovation dynamic won’t be surprised but the numbers are a useful support to an argument that has so far been mostly intuitive i.e. sanctions on China have spurred, not retarded, development.
With or without supporting evidence I wonder if and when politicians and their not-so-well-informed supporters will ever ‘get it’? In some ways, if innovation is spurred as in this case, one hopes they never will :-).
You can review the paper in full via this link Export Controls and Innovation in Sanctioned Countries.
Happy Sunday.