Conflict and intergroup trade evidence from the 2014 Russia-Ukraine crisis Vasily Korovkin and Alexey Makarin
By: Korovkin, Vasily
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Contributor(s): Makarin, Alexey.
Material type: 
ArticleSubject(s): GUERRA | UCRANIA | RUSIA | COMERCIO INTERNACIONAL | GRUPOS DE EMPRESAS | OPERACIONES SOCIETARIAS
In:
The American Economic Review v. 113, n. 1, January 2023, p. 34-70Summary: Does armed conflict reduce trade, even in noncombat areas, through the destruction of intergroup social capital? We analyze Ukrainian trade transactions before and after the 2014 Russia-Ukraine conflict. In a difference-in-differences framework, we find that Ukrainian firms from districts with fewer ethnic Russians experienced a deeper decline in trade with Russia. This decline is economically significant, persistent, and can be explained by erosion of intergroup trust. Affected Ukrainian firms suffered a decrease in performance and diverted trade to other countries. Our results suggest that, through social effects, conflict can be economically damaging even away from combat areas.
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Does armed conflict reduce trade, even in noncombat areas, through the destruction of intergroup social capital? We analyze Ukrainian trade transactions before and after the 2014 Russia-Ukraine conflict. In a difference-in-differences framework, we find that Ukrainian firms from districts with fewer ethnic Russians experienced a deeper decline in trade with Russia. This decline is economically significant, persistent, and can be explained by erosion of intergroup trust. Affected Ukrainian firms suffered a decrease in performance and diverted trade to other countries. Our results suggest that, through social effects, conflict can be economically damaging even away from combat areas.
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