DYNAMICS OF MUTUAL TRADE BETWEEN UKRAINE AND THE RUSSIAN FEDERATION IN THE CONTEXT OF CONFLICT’S IMPACT ON NATIONAL SECURITY: A CONCENTRATION-BASED APPROACH

Abstract

The purpose of the is to summarize and present the results of the study of economic prerequisites for the situation when trade between the aggressor (the Russian Federation) and the victim (Ukraine) was not stopped despite the conflict as well as to assess the dynamics of this trade in the context of indicators of national economic security of Ukraine. Methodology. The study is based on the analysis of International Trade Center data on exports and imports of Ukraine and the Russian Federation and mutual commodity flows for 2002-2019. In addition, the Herfindahl-Hirschmann index and the Linda index were calculated to determine the level of concentration of commodity and geographical structure of foreign trade. To assess the impact of the external sector on the level of economic security of Ukraine, indicators regulated by national legislation were evaluated such as economy openness, export coverage ratio of imports, times; share of the leading partner country in total exports of goods, share of the leading partner country in total imports of goods, share of the leading commodity (commodity group) in the total volume of goods exports, share of leading goods (commodity group) excluding energy imports in total imports of goods, share of raw materials and low degree of industrial export processing in total exports of goods, share of imports in domestic consumption, terms of trade index (price). Results of the survey showed that The Russian Federation was the largest trading partner, and remains a significant participant in Ukraine’s foreign trade operations today. At the same time the objective process of reducing the importance of the Russian Federation in the export-import trade of Ukraine had begun long before 2014. Despite the fact that the level of danger in the foreign sphere has decreased to a certain extent, such an improvement occurs against the backdrop of the impossibility of completely terminating trade and other economic relations with the Russian Federation. Practical implications. Based on the analysis, the areas of overcoming risks in the external sphere should be recognized: strengthening the capacity of the domestic market, including the implementation of infrastructure renewal programs for transport facilities and military-industrial complex, stimulating foreign investment in mechanical engineering; stimulating foreign investment in high-technology activities; implementation of energy efficiency programs; simplifying administrative and tax conditions for the provision of service as a substitute to commodity trade. Value/originality. Data on concentration level of foreign trade of Ukraine and the Russian Federation and on level of foreign economic component of national economic security of Ukraine.