The study proposes a data-based approximation of the effects of trade sanctions that can be computed on the basis of international input–output data. It also introduces a web-based dashboard that can be used to approximate the costs of trade sanctions for any combinations of sanctioning and sanctioned countries or sectors (accessible here).
The model computes that an embargo on Russia’s energy exports affects mostly Russia’s energy producing sectors, but also some manufacturing and transport services. The overall effect on the Russian economy is small, 0.64 percent decrease in GDP. The effect on the European economy is 16 times smaller, a decrease of 0.04 percent in European GDP, with heavy manufacturing, transport services, and extractive sectors affected the most in Europe. Some countries, though (Bulgaria, Estonia, Latvia, Lithuania, Finland, or the Czech Republic) are much more affected than others. A blanket embargo on Russian exports to Europe has larger consequences. The effect on the Russian economy is a substantial 3.6 percent fall in GDP; the effect on the European economy is still small, 0.22 percent fall in European GDP, about 16 times smaller.
An embargo of European exports to Russia would have a minuscule effect on the European economy, about 0.01 percent, because the most affected countries are once again small economies relatively close to Russia. Large economies are almost insulated from the shock. The effect on Russia is much larger: a fall of 0.5 percent of Russian GDP, about 40 times larger than the effect on Europe.
Read the full paper and explore the sanctions dashboard.
