Interestingly, economic sanctions are not very common nowadays, except for those imposed on North Korea and a few other countries. Countries are interacting more and more with each other, so this makes economic sanctions stand out more as an exception to the general trend of the global economy. The Donald Trump administration recently announced an expansion of sanctions on North Korea, focusing largely on financial institutions that do business with the communist nation. Jun Ma, an associate professor of economics at Northeastern University, is an expert in macroeconomics and international finance, financial economies, and the Chinese economy. He elucidated how sanctions work, whether or not they typically do work, and what the expanded sanctions might mean for North Korea, China, and the global economy.
The idea with economic sanctions is plain and simple: to isolate the economy. When we think about North Korea, for example, it needs energy imports. It doesn’t produce its own oil, so it needs to import oil because winter is brutal in North Korea, and the country also needs to use the oil to generate energy for automobiles for military use. All of those energy imports, if economic sanctions are imposed very strictly, will be substantially limited and impact North Korea’s ability and the amount of energy it can acquire for both civil and military usage.
The other impact can be seen in the daily lives of the country’s citizens, including high-level officials. North Korea needs to trade with other partners for very basic goods, like food and clothes. The North Korean economy is extremely closed and people know very little about it. As far as I know, it trades heavily with China for those basic supplies needed for daily living. If you strictly enforce economic sanctions, that’s going to substantially impact people’s lives. North Korea’s economy is related to the Chinese economy. And thanks to economic development in China in the past 30 years, the Chinese economy is closely related to the global economy. It’s hard to predict because the North Korean regime is very unstable, so you don’t know what’s going to happen. And some military or political disruption will affect the regional economy in East Asia, and ultimately the global economy also. It’s a ripple effect.
Harminder Singh