Working Paper: CEPR ID: DP17528
Authors: Kristian Behrens
Abstract: We investigate the economic effects of the Russia-Ukraine conflict—following the 2014 annexation of Crimea—on Russian border regions. While southern regions gained market access to Crimea, northern regions lost market access to Ukraine. Using nighttime lights data and geo-referenced plant-level data, we find that regions with deteriorating market access saw 43% less growth in lights—translating into 6%–12% lower growth in GDP depending on the assumed lights-GDP elasticity—and a 35% percent increase in the exit probability for manufacturing plants after 2014. Exploiting variations in closed local border crossings in the northern regions, we find that these effects may be partly driven by less cross-border labor flows.
Keywords: Border changes; Cross-border movements; Nighttime lights; Manufacturing plant exit; Conflict between Russia and Ukraine
JEL Codes: F51; F15; R11; R12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Reduced market access due to the Russia-Ukraine conflict (F69) | Reduction in growth in nighttime lights (O49) |
| Reduction in growth in nighttime lights (O49) | Decrease in GDP growth (O49) |
| Reduced market access due to the Russia-Ukraine conflict (F69) | Increased exit probability for manufacturing plants (L69) |
| Increased exit probability for manufacturing plants (L69) | Increased exit probability for most exposed plants (Q59) |
| Increased exit probability for manufacturing plants (L69) | Increased exit probability for least exposed plants (Q59) |