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The Effect of Sanctions on EU-Russia Trade: The Study for 2015 – 2019

Author

Listed:
  • Igor Drapkin

    (Higher School of Economics, Center for Industrial Policy Studies)

  • Kirill Sidorov

    (ral Federal University, Department of International Economics and Management)

  • Oleg Mariev

    (Ural Federal University, Department of Economics and Statistics)

Abstract
We analyze the influence of sanctions on bilateral trade flows between the European Union and the Russian Federation during 2015 – 2019. Despite trade sanctions and counter-sanctions being imposed against particular groups of commodities, their influence affected trade flows between Russia and the EU in all sectors. The proposed methodology of estimating the effect of sanctions on EU-Russia trade is based on the idea of calculating trade potentials and comparing them with actual values. The augmented gravity approach is used to construct an econometric model, while the Poisson pseudo maximum likelihood method is applied to derive unbiased estimates. It is shown that during 2015 – 2019, due to EU sanctions Russia lost USD 41.3 billion in export revenues annually, comprising 2.5 percent of its GDP. Russian exports to Europe declined in all basic industries, but the petroleum industry took 91.2 percent of the total losses. European aggregate exports to Russia have not suffered from mutual sanctions: although the European food industry lost USD 2.7 billion annually, these losses were compensated for by export growth in other industries.

Suggested Citation

  • Igor Drapkin & Kirill Sidorov & Oleg Mariev, 2022. "The Effect of Sanctions on EU-Russia Trade: The Study for 2015 – 2019," Journal of Economics / Ekonomicky casopis, Institute of Economic Research, Slovak Academy of Sciences, vol. 70(9-10), pages 743-767, August.
    • Handle: RePEc:sav:journl:v:70:y:2022:i:9-10:p:743-767
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Russia-EU trade; sanctions; counter-sanctions; trade potential; effect of sanctions; PPML;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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