Economic Resilience in Sanctioning Coalitions: A Panel Data Analysis of Structural Vulnerability in the EU

The thesis examines how structural economic factors, fiscal flexibility, sectoral diversity, and trade diversification, affect the economic resilience of EU member states under the 2022 sanctions imposed on Russia. Utilizing panel regression analysis across 27 EU countries from 2017 to 2023, the study evaluates real GDP growth, inflation (HICP), and trade balance to test three core hypotheses. The analysis reveals that fiscal flexibility, one of the thesis's primary indicators of economic resilience, significantly influences real GDP growth, especially when considering delayed effects through lagged indicators such as budget balances and social protection spending. This underscores the importance of countercyclical fiscal capacities in enabling states to absorb external economic shocks. Sectoral diversity consistently emerges as critical, with indicators such as economic complexity, energy dependence, and industrial share shaping macroeconomic resilience across real GDP growth and...Show moreThe thesis examines how structural economic factors, fiscal flexibility, sectoral diversity, and trade diversification, affect the economic resilience of EU member states under the 2022 sanctions imposed on Russia. Utilizing panel regression analysis across 27 EU countries from 2017 to 2023, the study evaluates real GDP growth, inflation (HICP), and trade balance to test three core hypotheses. The analysis reveals that fiscal flexibility, one of the thesis's primary indicators of economic resilience, significantly influences real GDP growth, especially when considering delayed effects through lagged indicators such as budget balances and social protection spending. This underscores the importance of countercyclical fiscal capacities in enabling states to absorb external economic shocks. Sectoral diversity consistently emerges as critical, with indicators such as economic complexity, energy dependence, and industrial share shaping macroeconomic resilience across real GDP growth and inflation models. Trade diversification demonstrates significant but selective impacts, notably influencing inflationary pressures; states with concentrated import structures were more susceptible to price shocks induced by sanctions. The findings challenge the prevailing assumption in sanctions literature that vulnerability primarily hinges on external trade exposure. Instead, resilience appears multidimensional, dependent on internal economic structures, policy capacities, and sectoral compositions. The thesis contributes to understanding economic resilience under sanctions, emphasizing that effective policy responses must be tailored to a state's unique economic profile. Policymakers are recommended to enhance fiscal buffers, diversify industrial sectors, and reduce trade concentration to strengthen resilience against future geopolitical disruptions.Show less

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Economic Resilience in Sanctioning Coalitions: A Panel Data Analysis of Structural Vulnerability in the EU