Decomposition Analysis of the Effects of Sanctions on Foreign Trade in the Russian Far East

The objective of this study is to conduct a decomposition of the impact of sanctions on trade between the Russian Far East and foreign countries during the 1999–2021 period. A downward trend in the Far Eastern trade with foreign countries involved in the sanctions standoff with Russia has been identified. Based on structural gravity models, it was determined that the immediate direct and cumulative effects of sanctions reduced trade in the Russian Far East with foreign countries involved in a sanctions standoff with Russia by an average of 42.1% and 54.8%, respectively. It was found that the immediate and cumulative effects of sanctions had a more negative impact on the Far East’s trade with foreign countries toward Russia (by 55.4%) than on trade from Russia toward foreign countries (by 54.0%), respectively. It was found that trade sanctions accounted for the overall negative impact of sanctions restrictions on the Far East’s foreign trade. A moderating effect of globalization on the negative impact of sanctions on the Far East’s foreign trade was observed, although this effect weakened as the Far Eastern economy shifted toward other foreign markets. It was found that, for the Far East’s foreign trade, the effect of globalization had a mitigating impact on the negative effects of sanctions imposed by Russia against foreign countries that was half as strong as that on sanctions imposed by foreign countries against Russia. An assessment of the overall effect of sanctions indicated that restrictions imposed by Russia against foreign countries had a greater negative impact on Far Eastern trade, rather than the reverse, due to the lesser mitigating effect of globalization. It is shown that, by 2022, Russia’s sanctions standoff with foreign countries created conditions for a shift in the Far East’s foreign trade, predominantly toward the nearby and large Chinese market, with the aim of reducing sanctions risks in favor of those foreign countries that did not participate in the sanctions