Sanctions and GVC resilience in developing countries: asymmetric shocks and adaptive responses

Area Development and Policy. 2026.

Fedyunina A., Drapkin I. M., Simachev Y. V.

Trade sanctions generate asymmetric shocks in developing economies, reshaping their integration into global value chains (GVCs). Using a gravity framework covering 68 developing countries over the period 2000–2021, this paper examines how sanctions affect forward and backward GVC linkages. We find that sanctions significantly reduce both dimensions of GVC participation: backward linkages suffer deeper and more persistent losses, whereas forward participation shows partial recovery in the long term. Firms’ anticipatory adjustments to political signals further depress GVC engage-ment even before formal sanctions are imposed. Resilience to shocks varies across countries: resource-rich economies and those with larger pre-sanctions foreign direct investment (FDI) stocks are better able to absorb disruptions. Sanctions also generate systemic spillovers, reducing GVC flows even with formally neutral partners, although neighbouring countries and large third-country partners mitigate some of these losses. Notably, China plays a distinctive role by supporting both forward and backward GVC linkages in sanctioned economies. Policy-wise, sanctions increasingly transform rather than destroy GVCs, producing asymmetric vulnerabilities and dynamic adjustment, which calls for development policies that prioritise adaptive capacity within GVCs over isolation avoidance.

Keywords: Китай, развивающиеся страны, China, прямые иностранные инвестиции, developing countries, торговые санкции, GVCs, ГЦСС, ресурсная рента, FDI, Natural resource rents, trade sanctions

Publication based on the results of: The Impact of External Shocks and Restrictions on the Strategies of Economic Agents in the Context of the New Reality (2025)