Reducing trade with Russia: Sanctions vs. reputation

Juan de Lucio, Raúl Mínguez, Asier Minondo (aminondo@deusto.es) and Francisco Requena Silvente
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Raúl Mínguez: Cámara de Comercio de España and Universidad Antonio de Nebrija. Calle de Santa Cruz de Marcenado, 27, 28015, Madrid (Spain).

No 2406, Working Papers from Department of Applied Economics II, Universidad de Valencia

Abstract: The invasion of Ukraine in February 2022 led the European Union to impose a wide range of economic sanctions on Russia. Parallel to this process, many multinational firms, due to reputational concerns, voluntarily decided to suspend their activities in Russia. This paper quantifies the impact of trade sanctions and the decision of firms to suspend activities on Spanish exports and imports with Russia. Using an event study methodology, we find that the decision of firms to suspend activities in Russia contributed to the reduction in exports and imports by 26% and 43%, respectively, while sanctions contributed by 9% and 21%, respectively. These figures highlight that firms’ actions to protect their reputation can significantly complement sanctions in reducing the amount of trade with target countries.

Keywords: sanctions; reputation; Russian invasion of Ukraine; firm-level exports and imports; Spain (search for similar items in EconPapers)
JEL-codes: F10 F14 (search for similar items in EconPapers)
Date: 2024-01
New Economics Papers: this item is included in nep-cis, nep-int and nep-tra
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