The Effect of Russian Invasion of 2022 on Ukraine’s International Trade

Russian invasion of 2022 has made profound changes in the world, changing global security and economy. It has also tremendous effect on the Ukrainian economy, with mass migration, destruction of human capital and productive capacity. It also negatively affected Ukraine’s ability to engage in international trade. The flow of grain exports that were shipped by marine transport from Ukraine had stopped for nearly 6 months and required UN and Turkey mediation to resume. Other changes in trade are not as visible as Ukrainian export profile consists of not only agricultural goods, but also iron, steel, ore and machinery. In this work, we try to evaluate the effect of the war on Ukrainian exports using gravity model. In particular, we look at extensive and intensive export margins as well as average volume per category using HS 2-digit and HS 6-digit trade statistics. The data covers 2017-2022 and explores Ukraine’s top export categories, as well export as a whole. The war seems to have a diverse effect across different categories of goods. While agricultural goods export suffered a moderate decrease and fast recovery, the exports of iron, steel and ore decreased substantially with little to no recovery. The results suggest that non-agricultural exports appear to be more vulnerable to disruption of trade by war, in particular, due to the sea routes blockade.