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The Economic Costs of Hybrid Wars: The Case of Ukraine

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  • Bluszcz, Julia
  • Valente, Marica

Abstract

With more than ten thousand casualties, the ongoing hybrid Ukrainian war between pro-Russian separatists and the government in the Donbass region, Ukraine’s productive core, has taken a severe toll on the country. Using cross-country panel data over the period 1995–2017, this paper estimates the causal effects of the Donbass war on Ukraine’s GDP. Our counterfactual estimation by the synthetic control method shows that Ukraine’s per capita GDP foregone due to the war amounts to 15.1% on average for 2013–2017. Separate analysis for the affected regions of Donetsk and Luhansk indicates an average causal effect of 47% for 2013–2016. Results are robust to pre-war confounds, namely, the Orange Revolution and Ukrainian-Russian gas disputes. As such, we discuss mechanisms underlying the war’s causal effects on economic performance, which is of broader relevance for debates on the role of government in hybrid conflict management.

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  • Bluszcz, Julia & Valente, Marica, 2020. "The Economic Costs of Hybrid Wars: The Case of Ukraine," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue Latest Ar, pages 1-25.
    • Handle: RePEc:zbw:espost:224913
    DOI: 10.1080/10242694.2020.1791616
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    Cited by:

    1. Blaž Frešer, 2022. "Multidimensional Model of High-Growth Companies: Do COVID-19 and the Ukraine–Russia Crisis Lead to Differences?," Sustainability, MDPI, vol. 14(22), pages 1-25, November.
    2. David B. Audretsch & Paul P. Momtaz & Hanna Motuzenko & Silvio Vismara, 2023. "War and Entrepreneurship: A Synthetic Control Study of the Russia-Ukraine Conflict," CESifo Working Paper Series 10466, CESifo.
    3. David Audretsch & Paul P. Momtaz & Hanna Motuzenko & Silvio Vismara, 2023. "The Economic Costs of the Russia-Ukraine War: A Synthetic Control Study of (Lost) Entrepreneurship," Papers 2303.02773, arXiv.org.
    4. Aleksandar Keseljevic & Rok Spruk, 2022. "Estimating the Effects of Syrian Civil War," Papers 2209.03046, arXiv.org.

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    More about this item

    Keywords

    Hybrid conflict; economic costs; Ukraine crisis; synthetic control; conflict management;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • F5 - International Economics - - International Relations, National Security, and International Political Economy
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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