Economic effects of the war in Ukraine. An international political economy approach

Abstract

This paper analyses selected effects of the war in Ukraine, presenting first an historical context of the relation between the two countries, how the conflict began, what possible reasons could have led this act of war and how Western countries responded by sanctioning Russia. The focus is put mainly on trade, food security, energy system, global supply chains and transports connectivity. Finding that even though Russia and Ukraine have a relatively small participation in global supply chains, they both source key raw-materials and goods that have put the value chains of several sectors in a very difficult position. Prices of commodities like oil and gas have increased significantly. Food security is a major concern, grains’ prices have spiked affecting consumers directly, particularly on developing countries that rely on food imports from Ukraine. Inflation, shortages and geoeconomic fragmentation are among the conflict’s consequences. Regarding transports and connectivity, the conflict has interrupted the normal flow of goods between Asia and Europe - obligating both sides to find alternatives routes- and Black Sea ports are now considered a “high risk area” increasing premium costs insurance on maritime transport.