Trade, Deteriorating Terms of Trade and FDI

Zsoka Koczan and Maxim Chupilkin ()
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Maxim Chupilkin: European Bank for Reconstruction and Development

Chapter Chapter 7 in Central and Eastern European Economies and the War in Ukraine, 2024, pp 215-239 from Springer

Abstract: Abstract This chapter examines changes in trade patterns, terms of trade and foreign direct investment flows in Central and Eastern European Economies in the aftermath of the start of the war on Ukraine. Slower global trade growth and weaker demand from advanced economies weighed on the outlook for economies in Eastern Europe, closely integrated in European supply chains. The war in Ukraine also resulted in substantial reorientation in trade patterns between Central and Eastern European Economies, Ukraine and Russia. While the role of Ukraine as a trading partner was relatively modest before the start of the war, imports (in particular of food) from Ukraine and exports to Ukraine (driven by minerals and arms) rose sharply (though exports of machinery, chemicals and transport equipment, declined). Sharp initial increases in energy prices pushed up Central and Eastern European Economies’ imports from Russia and worsened their terms of trade, though imported quantities of gas, and in some cases oil, declined, offsetting some of the price effect. Exports to Russia dropped for most goods, with the decline being most pronounced for machinery and transport equipment. Foreign direct investment inflows from Russia and Ukraine were modest before the start of the war. Flows from Russia, concentrated in coal, oil and gas, automotives, transportation and warehousing and metals, collapsed since the start of the war (though the decline started earlier). Inflows from Ukraine, in turn, increased substantially, predominantly in software and IT services, in line with significant movement of skilled Ukrainians to these economies.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:conchp:978-3-031-61561-0_7

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DOI: 10.1007/978-3-031-61561-0_7

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