Ukraine's unconsidered losses from the annexation of Crimea: what should we account for in the DCFTA forecasts?

Olekseyuk, Zoryana / Hannah Schürenberg-Frosch
External Publications (2018)

in: Review of Development Economics 23 (2), 877-901

DOI: 10.1111/rode.12574
Information

In March 2014 Crimea unilaterally declared its independence from Ukraine and joined the Russian Federation. The separation of a part of a state's territory and economy is an interesting matter to examine. The economy of Ukraine has not only shrunk, but also changed its structure as Crimea had a quite distinct production pattern compared to the rest of Ukraine. Moreover, policy measures initialized before the separation may have different effects once applied only to a part of the former economy. This paper proposes a strategy to model the separation of part of an economy and its inclusion into another country and applies this strategy to the case of Crimea, Ukraine, and Russia. Having constructed a model for the new geographical and economic situation, we reinvestigate the possible effects of a Deep and Comprehensive Free Trade Agreement between Ukraine and the EU and compare the results for the situation with Crimea as part of Ukraine. We find that the annexation of Crimea leads to severe economic losses for Ukraine which are partly overproportional compared to Crimea's economic size. These negative effects can be compensated by implementing the DCFTA with the EU as we also show in our model results.

About the author

Olekseyuk, Zoryana

Economist

Olekseyuk

Further experts

Berger, Axel

Political Science 

Brandi, Clara

Economy and Political Science 

Hadank-Rauch, Rebecca

Environmental and Development Sciences 

Haug, Sebastian

Political Science 

Mehl, Regine

Political Science 

Morare, Ditebogo Modiegi

Political Science 

Nowack, Daniel

Political Scientist 

Owusu, Solomon

Economy 

Stender, Frederik

Economist 

Stewart, Benjamin

Social Science 

Volz, Ulrich

Economist 

Wehrmann, Dorothea

Sociology 

Wingens, Christopher

Political Scientiest