In an era of intensifying geopolitical competition, the strategic use of export controls has become a centerpiece of national security policy for the United States and its allies. By restricting the flow of high-technology goods and dual-use products—items that have both civilian and military applications—governments aim to limit the capacity of adversaries to modernize their defense forces. However, a new working paper, released in October 2026 as part of the National Bureau of Economic Research series (Working Paper 35898, DOI 10.3386/w35898), suggests that the efficacy of these measures depends heavily on the scope and nature of international cooperation.
The study, which synthesizes newly available data on U.S. export control classifications and licensing outcomes with a sophisticated quantitative general equilibrium model, challenges the conventional wisdom regarding unilateral trade restrictions. By accounting for complex input-output linkages in the global economy and distinguishing between civilian and military final expenditure, the researchers provide a granular look at how trade and production adjust when barriers are erected. Their findings indicate that while export controls do indeed create significant frictions, their ability to diminish an adversary’s military capabilities is vastly amplified when countries act in concert through multilateral export control regimes (MECRs).
The Mechanics of Trade Frictions
To understand the impact of these policies, the researchers first established a baseline for how export controls affect market dynamics. Their data reveals that U.S. export controls impose substantial costs on trade, manifesting as significant "export and entry frictions." Essentially, when the U.S. government restricts the sale of specific technologies, it disrupts established supply chains, increases the cost of compliance for firms, and creates barriers that prevent new entrants from accessing those markets.
However, the study finds that these negative economic effects—the "frictions"—are markedly smaller when U.S. exports are directed toward members of multilateral export control regimes. The differential between unilateral U.S. policy and multilateral coordination is significant, estimated to be equivalent to an export cost of 15 to 29 log points. This suggests that when the U.S. acts in isolation, it bears a disproportionate burden in terms of economic disruption compared to when it aligns its export policies with international partners.
The core issue, according to the research, is the phenomenon of trade diversion. When a single country imposes a unilateral embargo or strict licensing requirement, adversaries often simply shift their sourcing to other nations that have not adopted similar restrictions. The model reveals that when the U.S. acts unilaterally, approximately 28% of the reduction in controlled exports is replaced by trade from other countries. In contrast, under a multilateral regime, that leakage drops to just 7%. This stark difference underscores the "leaky bucket" problem inherent in unilateral sanctions: as long as there is an alternative provider, the targeted nation can often bypass the intent of the control.
Impact on Adversary Military Capabilities
The primary objective of export controls is not merely economic; it is to degrade or slow the development of an adversary’s military power. The researchers measured this security impact by examining the effect of controls on an adversary’s real military expenditure, specifically by tracking the rise in their "military price index."
The findings are compelling: multilateral controls prove far more effective at increasing the cost of military procurement for adversaries than unilateral actions. By limiting the supply of specialized components and dual-use technologies, these regimes drive up the price that adversaries must pay to acquire or replicate the capabilities they seek. This, in turn, consumes a larger portion of their defense budget, effectively reducing their ability to field advanced equipment.
When comparing the "security impact"—defined as the ratio of U.S. real military expenditure relative to that of its adversaries—the study shows a clear disparity. Under multilateral controls, this security metric rises by about 1 log point. Under unilateral controls, the improvement is a negligible 0.14 log points. Perhaps most tellingly, the researchers note that even a total U.S. embargo—the most extreme form of unilateral action—fails to reproduce the security outcomes achieved through the cooperation of a multilateral regime.
Balancing Civilian and Military Costs
A recurring concern for policymakers is the "civilian cost" of export controls. Since dual-use goods are often essential to modern industry—ranging from high-end semiconductors to advanced materials used in manufacturing—restricting these items can inadvertently damage the civilian economy of the adversary. The study notes that both unilateral and multilateral approaches impose similar civilian real costs. This means that if the U.S. is going to accept the domestic economic disruption of export controls, it is essentially paying the same "price" regardless of whether the strategy is multilateral or unilateral. Given that the multilateral approach yields a much higher return on investment regarding military security, the authors imply that the strategic argument for multilateralism is overwhelming.
The model also highlights the importance of input-output linkages. In the modern global economy, a single military end-product is the result of a long, complex chain of inputs. When an export control restricts one node in that chain, it creates a ripple effect throughout the entire production network. Unilateral controls are easily circumvented because adversaries can often reconfigure their internal production or source from non-aligned providers. Multilateral regimes, by capturing a larger portion of the global production landscape, make it significantly more difficult for an adversary to find workarounds. By restricting access at multiple points in the supply chain simultaneously, these regimes force adversaries to face a systemic scarcity of critical technology.
The Strategic Imperative for Multilateralism
The research provides a data-driven justification for the recent shift in U.S. foreign policy toward "minilateral" and multilateral technology-security partnerships. As the global technological landscape becomes increasingly interconnected, the ability of any one nation to unilaterally control the flow of innovation is diminishing. The data from this study suggests that attempts to do so via unilateral embargoes may offer a false sense of security, as the targeted adversaries find alternative routes to satisfy their requirements.
The study concludes that the effectiveness of export controls is not merely a function of the severity of the restrictions, but rather the breadth of the coalition enforcing them. The 7% versus 28% diversion rate serves as a critical indicator for policymakers: the strength of the control is found in the breadth of the alliance. For the United States, the findings suggest that the path to maintaining a military edge lies in diplomatic efforts to harmonize export control regimes with allies, rather than relying on the blunt instrument of unilateral trade restrictions.
By demonstrating that multilateral coordination creates a superior security outcome for the same level of civilian cost, the working paper provides a roadmap for future trade policy. It emphasizes that in a world where production and consumption are deeply integrated across borders, the most effective way to deny an adversary access to sensitive technology is to build a unified front that leaves no viable alternative for procurement. As the U.S. continues to navigate its strategic competition, the insights provided by this quantitative model highlight that security is not just a matter of what you deny to others, but who you convince to join you in the effort.
