Ukraine war-induced sanctions against Russia: Consequences on transition economies

Gohar Sedrakyan

Journal of Policy Modeling, 2022, vol. 44, issue 5, 863-885

Abstract: We analyze the spillovers of Western economic sanctions against Russia into twenty-seven transition economies of the former Soviet Union, and Central and Eastern Europe. These spillovers are measured in terms of their impact on bilateral trade and direct investments for the period of 2014–2018. We construct a new dataset to quantify each episode of Western/US sanctions against Russia. The gravity models of bilateral trade and direct investment are used and the data analysis is conducted using Poisson pseudo-maximum likelihood econometric technique. We estimate that the Western and U.S. sanctions against Russia spilled over into third-party small countries. These sanctions resulted in the significant decline of exports from transition economies, Russian imports to transition economies, and Russian direct investments to transition economies. Interestingly, the direct investments to Russia from transition economies sharply increased during the same period. The quantitative estimates of the spillovers suggest the following cumulative changes. Due to an imposed sanction type (e.g., against an individual, entity or sector) each episode of Western/U.S. sanction resulted in the decline of aforementioned indicators in the range of 10.9–30.5-million-dollar/5.6–16.9-million-dollar of exports from transition economies, 6.3–17.7-million-dollar/3.3–9.8-million-dollar of Russian imports to transition economies, and 3.4–9.4-million-dollar/1.7–5.2-million-dollar of Russian direct investments to transition economies. The direct investments to Russia from transition economies increased by 10.9–30.6-million-dollar/5.7–17-million-dollar, respectively.

Keywords: Sanctions; Transition economies; Small open economies; Spillover effects; Gravity models; International trade; Direct investments (search for similar items in EconPapers)
JEL-codes: F4 F41 F43 F51 P2 P33 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jpolmo:v:44:y:2022:i:5:p:863-885

DOI: 10.1016/j.jpolmod.2022.08.003

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