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Countering Sanctions: The Unequal Geographic Impact of Economic Sanctions in North Korea

Aug 2014
Working Paper
519
Yong Suk Lee

This paper examines how an autocratic regime domestically counters the impact of economic sanctions. A stylized model predicts that, as long as non-compliance is not too costly, the autocrat redistributes resources to the more valuable urban area when sanctions increase. Empirically, I examine the case of North Korea. I use the satellite night lights data to create average luminosity for each one minute by one minute cell between 1992 and 2010. I construct a sanctions index that varies based on the international response to North Korea’s nuclear pursuit. I find that sanctions increase the urban-rural luminosity gap by 1.07%. Consistent with urban elite capture, Pyongyang, the center of power is best shielded from sanctions followed by province capitals. The hinterlands respond: luminosity near the Chinese border increases with sanctions. Sanctions that fail to change the leader’s behavior increase inequality at a cost to the already marginalized hinterlands.

Publication Keywords: 
Economic Sanctions
Urban Capture
Regional Inequality
Satellite Lights Data
Geographic Regions: