A Theoretical and Empirical Analysis of Economic Sanctions and National Security in the United States
The effectiveness of economic sanctions has been a controversial topic due to its impact on trade fluctuation and its ambiguity in legal affairs. It is commonly believed that economic sanctions impose harm to imports and exports, leading to a negative effect on the growth of the economy. In contrast, the concept of national security receives universal acceptance and the highest priority from the government, because of the urgency to protect the people and to promote stable welfare for the nation. This Senior Research Project aims to clarify and elaborate upon the concept of economic sanctions within the context of national security, with a practical approach toward the question of whether economic sanctions prove to be efficient in the said framework. This paper specifies the social and economic benefits of economic sanctions, specifically in the logistics industry, to demonstrate that these benefits can strengthen national security, which would be vital to the nation. This will be approached though the main focus on the dead-weight loss of import tariffs, which is considered to be a form of economic sanctions, and analyzing its relationship with national security and net export, an important variable to calculate the Gross Domestic Product (GDP). The outline of the paper is as follows: (1) the Introduction section will provide a concise definition of economic sanctions and national security, and will state the reason why more attention needs to be paid to these concepts. This is followed by (2) a Literature Review section that will highlight the efficiencies and the inefficiencies of economic sanctions as well as the political background of national security. Then (3) an Economic Analysis, which will provide an economic model as a background for a deeper understanding of national security as a public good. This also includes for an explanation about import tariffs' deadweight loss, and a potential link between these two factors. This will be followed by (4) an Econometrics Analysis, which seeks to strengthen the argument by answering the question about the extent to which import tariffs may have an impact on the economy, through regression analysis based on an import export data sample. The last section (5) will be the Application: Example from DHL will examine how DHL, the world's leading logistics company, has expanded its monopoly power despite the possible negative effects of import tariffs on net export. The main conclusion of the paper is that economic sanctions can create social benefits to the nation by strengthening national security.