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Perception of Risks Associated with Economic Sanctions: The Case of Russian Manufacturing

Author

Listed:
  • Golikova Victoria

    (National Research University Higher School of Economics)

  • Kuznetsov Boris

    (National Research University Higher School of Economics)

Abstract

This paper is focused on assessing the factors of risks for Russian manufacturing firms due to the sanctions imposed on Russia by the EU, US and other countries in 2014. While there is extensive literature on assessing the successes and failures of international sanctions on the economies of both senders and targets on a macroeconomic level (Hufbauer et al., 2007; Drezner 1998, 2003; Morgan et al, 2009; Krustev, 2010; Morgan et al, 2009 among others), we are more interested in trying to understand the corporate response, i.e. which firms evaluate the introduction and increasing scale of economic sanctions as a threat to their corporate strategy and their possible reactions aimed at adjusting to a changing environment due to the geopolitical shock. Our research, based on a recent survey of manufacturing companies, provides evidence that Russian manufacturing firms have in the last decade become much more integrated into the global economy than is commonly assumed, via FDI, foreign trade, including both the importing of technological equipment and intermediates, via establishing international partnerships and extensively supplying foreign companies which operate in Russia. Considering the self-selection effect of the top performing firms in terms of foreign trade, we can state that sanctions could be the most harmful effect for the better performing and globalized firms and, thus, the impact of the sanctions on the prospects of the Russian manufacturing sector may be very strong in the medium and long-term perspectives

Suggested Citation

  • Golikova Victoria & Kuznetsov Boris, 2015. "Perception of Risks Associated with Economic Sanctions: The Case of Russian Manufacturing," HSE Working papers WP BRP 115/EC/2015, National Research University Higher School of Economics.
  • Handle: RePEc:hig:wpaper:115/ec/2015
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    References listed on IDEAS

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    Cited by:

    1. Ankudinov, Andrei & Ibragimov, Rustam & Lebedev, Oleg, 2017. "Sanctions and the Russian stock market," Research in International Business and Finance, Elsevier, vol. 40(C), pages 150-162.
    2. Shida, Yoshisada, 2019. "Russian Business under Economic Sanctions: Is There Regional Heterogeneity?," MPRA Paper 93817, University Library of Munich, Germany.
    3. , 2020. "The Impact of Financial Sanctions: The Case of Iran 2011-2016," International Finance Discussion Papers 1281, Board of Governors of the Federal Reserve System (U.S.).
    4. Jakub Horak, 2021. "Sanctions as a Catalyst for Russia’s and China’s Balance of Trade: Business Opportunity," Journal of Risk and Financial Management, MDPI, Open Access Journal, vol. 14(1), pages 1-26, January.
    5. Shida, Yoshisada, 2019. "Russian Business under Economic Sanctions: Is There Regional Heterogeneity?," MPRA Paper 93817, University Library of Munich, Germany.

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    More about this item

    Keywords

    economic sanctions; perceptions of risks; manufacturing firms; Russia;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population

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