IMPACT OF WAR IN UKRAINE ON ECONOMIC GROWTH OF LITHUANIA
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Abstract
The issue of Russia's invasion of Ukraine and its impact on countries' economic growth is critical in today's global landscape. The conflict has caused severe economic disruption, including disruptions to trade routes, investment uncertainty, a decline in the country's GDP, a rise in inflation and a significant increase in unemployment rates, both in Ukraine and in neighbouring countries. The purpose of the article is to analyse the impact of the war in Ukraine on the economic growth of Lithuania, which plays an important role in the sovereignty and territorial integrity of Ukraine, the article covers the data for 2002-2023. In order to find a model of economic growth for Lithuania during the war in Ukraine, the following parameters were analysed: the number of immigrants from Ukraine in Lithuania, Lithuania's military spending, the long-term interest rate, the level of business confidence, Lithuania-Ukraine exports, Lithuania-Russia imports, Ukraine-Lithuania exports, Ukraine-Lithuania imports, foreign direct investment in Lithuania, financial help to Ukraine from Lithuania, renewable energy consumption, unemployment rate, and inflation. The subsequent factors have been selected on the basis of a review of the extant literature and an analysis of the research conducted by foreign and domestic scholars. The analysis of Lithuania's economic growth has been conducted using the Harrod-Domar model, which focuses on investments and savings as a means of increasing economic growth. The hypothesis concerning the factors has been tested using correlation analysis to ascertain the relationship between the dependent and independent variables, and to identify the parameters with the most significant impact on economic growth. A thorough regression analysis reveals a substantial non-linear association between Lithuania's economic growth, its military expenditure, the influx of immigrants from Ukraine, energy consumption and its provision of military assistance to Ukraine. To optimise the model's parameters, an assessment of expert opinions was conducted, utilising linear programming to maximise economic growth in Lithuania. As Lithuania is geographically proximate to both Ukraine and Russia, and has historically maintained robust trade relations with both nations, it is imperative to ascertain the potential ramifications of the war in Ukraine on Lithuania's economic growth. The research findings and the models developed can serve as a valuable analytical framework for the study of other post-Soviet economies, facilitating the evaluation of their economic development in the context of geopolitical conflicts.
How to Cite
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economic growth, geopolitical risk, war
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