Sanctions are aimed at the elites in power. But, how would the elites respond to sanctions and in turn impact the domestic population? A stylised model predicts that, as long as non-compliance is not too costly, autocrats would respond to economic sanctions by redistributing resources to the economy’s more valuable urban sector. Since unequal resource distribution could trigger revolts and threaten the stability of the regime, the autocrat uses its military power to deter potential revolts. I empirically examine North Korea where sanctions have had no impact on changing the regime’s pursuit for nuclear weapons, and the autocrat maintains a strong control of the military and the people. North Korea’s isolation from the international world renders it an ideal case to study the domestic impact of sanctions. Furthermore, North Korea’s restriction on migration enables one to study urban elite capture without worrying about domestic migration that often confounds identification. However, data on North Korea is almost non-existent and what is available is often unreliable.
Recent research innovations in the study of satellite night lights data provide one avenue around the data constraint. Researchers have found the satellite night lights to be a reliable proxy for economic activity in countries where economic data are sparse, particularly at sub-national levels (Henderson et al. 2012). I use the US Defense Meteorological Satellite Program’s lights data and create an average luminosity measure for each one arc minute by one arc minute grid, which translates to approximately a one mile by one mile grid, between 1992 and 2000. The very isolation and repressiveness of the North Korea makes lights data easier to study than it is elsewhere. This is because in North Korea the overall luminosity levels are lower, alleviating the problem of light over-saturation and top-coding that often limits the accuracy of studies of satellite data in other regions (Figure 1).
Figure 1. Satellite image of the Korean peninsula (2010)
Notes: The area covers 123 to 131 degree longitude and 32 to 44 degree latitude. Image is extracted for 2010.
I then document North Korea’s nuclear provocations and agreements that led countries and the UN to tighten or relax sanctions on North Korea. These events were triggered by North Korea’s nuclear ambitions, military first policy, and Juche ideology, an ideology that strives for international independence. I aggregate the events by year and type, i.e., trade, finance, aid or remittance, and travel sanctions, to create a sanctions index. So what does such an analysis reveal?
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