The Impact of Geopolitical Tensions on Economic Activity in Russia

ERI FEB RAS	Issue's contents	RUS
	Regionalistica 2023 Volume 10 number 5 pages 24-45

Title of the article	The Impact of Geopolitical Tensions on Economic Activity in Russia
Pages	24-45
Author 1	Vasilyeva Rogneda Ivanovna junior research fellow Institute of Economics UB RAS 29, Moskovskaya Street, Yekaterinburg, Russia, 620014 This email address is being protected from spambots. You need JavaScript enabled to view it. ORCID: 0000-0001-5539-3145
Author 2	Rozhina Ekaterina Andreevna junior research fellow Institute of Economics UB RAS 29, Moskovskaya Street, Yekaterinburg, Russia, 620014 This email address is being protected from spambots. You need JavaScript enabled to view it. ORCID: 0000-0003-4543-6265
Author 3	Voytenkov Valentin Aleksandrovich research assistant HSE University 20, Myasnitskaya Street, Moscow, Russia, 101000 This email address is being protected from spambots. You need JavaScript enabled to view it. ORCID: 0000-0002-7832-3710
Abstract	The purpose of the research is to empirically assess the impact of geopolitical risks and economic policy uncertainty on economic activity in Russia. We implement business and consumer confidence index, shares of foreign trade with BRICS countries and western economies and economic growth rates to describe the domestic activity. We use monthly data ranged January 2010 till December 2021 for econometric modelling. The empirical strategy exploits vector error correction model to estimate the impact of external shocks on Russian economic activity. The results demonstrate that the enhancement of economic policy uncertainty and geopolitical risks do not decrease the Russian producers’ confidence in the short run. However, the consumer expectations are found rather negative in the short and long term. The foreign trade of Russia with western countries significantly decreased over the investigated period, while trade turnover with BRICS countries enhanced. Meanwhile, the dynamics of trade with BRICS partners responds less to the changes in economic policy. Coincidently, geopolitical risks enhanced the trade flows between Russia and BRICS, which in turn promoted the Russian economic growth. The trade dynamics with European Union and United States shows a negative trend affected by external factors. However, it has minor effect on Russian economy in the long run. In this respect, we find evidence that economic activity in Russia is subject to external shocks. At the same time, the economy of Russian Federation can adopt to economic policy uncertainty and geopolitical risks, therefore their negative influence in the short run smooth in the long-term perspective.
Code	339.9+519.862.6
DOI	10.14530/reg.2023.5.24
Keywords	external shocks, economic growth, foreign trade, producer and consumer confidence, geopolitics
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For citation	Vasilyeva R.I., Rozhina E.A., Voytenkov V.A. The Impact of Geopolitical Tensions on Economic Activity in Russia. Regionalistica [Regionalistics]. 2023. Vol. 10. No. 5. Pp. 24–45. http://dx.doi.org/10.14530/reg.2023.5.24 (In Russian)
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Financing	The research is carried out according to state task of the Institute of Economics UB RAS for 2021–2023 No. 0327-2021-0019 «Modelling of spatial development of territories within the concept of economic security».
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