Description:
Economic sanctions and the global supply chains are both important matters affecting the evolution of the international economic order. What impacts economic sanctions have on international supply chain relationships is explored, and the mechanisms are discussed in this paper. Economic sanctions are shown to increase the probability of supply chain disruption for firms between the sender and the target countries by 4%, and decrease supply chain establishment by 8.5%. Any decline in political trust at the national level, concerns about policy uncertainty at the firm level, deterioration in public sentiment at the individual level, as well as rising trade costs are important mechanisms underlying these negative effects. We also find that economic sanctions will lead to the nearshoring of supply chains, rather than localization or regionalization