Trade in times of conflict and sanctions : A gravity model analysis on the trade between the Scandinavian countries and Russia during the Russian-Ukrainian conflict
Master thesis
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https://hdl.handle.net/11250/3093812Utgivelsesdato
2023Metadata
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- Master Thesis [4490]
Sammendrag
In this thesis we study trade flows between the Scandinavian countries Denmark, Norway and
Sweden and Russia. Particularly, we investigate the trade flows in light of the Russian-
Ukrainian conflict and the following sanctions against Russia imposed by the EU. We look at
data on exports, imports and total trade between the Scandinavian countries and Russia and
how they have developed in the period from 2012 till third quarter of 2022. Insights in this
development are interesting and important, both to evaluate the effectiveness of the sanctions
already imposed, and what implications these findings may have for future policy work.
To answer the research question, we have used both descriptive statistics and regression
analysis. We have used an augmented gravity model when evaluating the development of trade
flows. To estimate the relationship between trade flows and conflict and sanction, we have
added dummy variables to the traditional gravity model that adhere to important events in the
period.
Our main findings are that the exports from the Scandinavian countries to Russia tend to
decrease from the first sanctions are imposed in 2014, mainly explained by the Russian import
embargo on food effective from August of 2014. Further, imports from Russia have not
significantly changed until second quarter of 2022, when the EU put Russia under a strict and
wide-ranging sanction regime as a respond to the Russian invasion of Ukraine in February
2022. Our main explanation for why it has not decreased earlier is that the goods the
Scandinavian countries imported to Russia were not directly included in the sanction
programs. We do not see any change in trade in periods where new sanctions are not imposed.