High-priority battlefield items and television sets : How sanctions reduced Russians’ access to goods
Korhonen, Iikka; Simola, Heli (27.02.2024)
Numero
3/2024Julkaisija
Bank of Finland
2024
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi-fe202402278890Tiivistelmä
We examine Russian imports since a coalition of countries imposed sanctions on exports to Russia. As Russia no longer publishes detailed statistics on foreign trade, we rely on export data from its largest trading partners (mirror statistics). We are particularly interested in trade diversion, i.e. the extent to which Russian imports have shifted from sanctioning countries to other countries. Our analysis is based on monthly export data and focuses on technology goods (HS codes 84 and 85) utilizing a difference-in-difference approach. Our dataset covers exports to Russia at the HS6-level of disaggregation from 26 sanctioning and 14 non-sanctioning countries during 2018‒2023. We find that the exports of sanctioning countries to Russia fell drastically overall, with exports of sanctioned goods declining more than average exports. On the other hand, the export of sanctioned goods to Russia by non-sanctioning countries have risen more than their overall exports, indicating that Russia has managed to replace some goods no longer available from sanctioning countries, but not all of them.
Julkaisuhuomautus
NON-TECHNICAL SUMMARY
FOCUS
A wide coalition of countries has imposed extensive economic sanctions on Russia since Russia launched a full-scale war in Ukraine in February 2022. A key aim of the sanctions has been to curb Russia’s ability to make war by restricting the availability of technology critical to Russia’s military industry. The main mechanism is restriction of technology goods exports to Russia. We examine the effects of these restrictions on exports of sanctioning and non-sanctioning countries to Russia. We are particularly interested in trade diversion, i.e. the extent to which Russian imports have shifted from sanctioning countries to other countries.
CONTRIBUTION
We provide an analysis based on highly disaggregated data on how sanctions have changed Russia’s import patterns of technology goods. We focus on the trade diversion aspect with an extensive country coverage, up-to date data and differentiation between categories of sanctioned goods. We also control for the variation in timing of the export restrictions.
FINDINGS
We find that the exports of sanctioning countries to Russia fell drastically overall, with exports of sanctioned goods declining more than exports of non-sanctioned goods. On the other hand, exports from non-sanctioning countries to Russia have generally recovered and now exceed pre-invasion levels. The level of exports of sanctioned goods from non-sanctioning countries has risen more than the level of exports of non-sanctioned goods since the invasion. The role of China is substantial, but exports of other non-sanctioning countries have also risen. Nevertheless, the exports of non-sanctioning countries to Russia have failed to completely make up for the loss of exports to Russia from sanctioning countries.
FOCUS
A wide coalition of countries has imposed extensive economic sanctions on Russia since Russia launched a full-scale war in Ukraine in February 2022. A key aim of the sanctions has been to curb Russia’s ability to make war by restricting the availability of technology critical to Russia’s military industry. The main mechanism is restriction of technology goods exports to Russia. We examine the effects of these restrictions on exports of sanctioning and non-sanctioning countries to Russia. We are particularly interested in trade diversion, i.e. the extent to which Russian imports have shifted from sanctioning countries to other countries.
CONTRIBUTION
We provide an analysis based on highly disaggregated data on how sanctions have changed Russia’s import patterns of technology goods. We focus on the trade diversion aspect with an extensive country coverage, up-to date data and differentiation between categories of sanctioned goods. We also control for the variation in timing of the export restrictions.
FINDINGS
We find that the exports of sanctioning countries to Russia fell drastically overall, with exports of sanctioned goods declining more than exports of non-sanctioned goods. On the other hand, exports from non-sanctioning countries to Russia have generally recovered and now exceed pre-invasion levels. The level of exports of sanctioned goods from non-sanctioning countries has risen more than the level of exports of non-sanctioned goods since the invasion. The role of China is substantial, but exports of other non-sanctioning countries have also risen. Nevertheless, the exports of non-sanctioning countries to Russia have failed to completely make up for the loss of exports to Russia from sanctioning countries.