An Impact Path Analysis of Russo–Ukrainian Conflict on the World and Policy Response Based on the Input–Output Network

Abstract

With the outbreak of the Russo–Ukrainian conflict, serious economic and financial sanctions have been initiated against Russia by many nations led by the United States and Europe. In the age of economic globalization, no countries can stand or fall alone. Which countries and industries will the economic shocks caused by the sanctions affect? How will the shocks propagate through the global economic system? In this paper, we adopt the input–output analysis and complex network methods to explore an impact path analysis of the Russo–Ukrainian conflict on the world from the regional, industrial, and critical path perspectives. The results show that (1) Russian economic development tends to depend more on the interaction among domestic industries, so it has a certain compressive capacity against sanctions. (2) There is a high economic interdependence between Russia and China, Germany, the United States, France, and South Korea. Sanctions against Russia will cause quite direct and serve economic shocks on these countries alongside Russia. (3) Industries such as Mining and quarrying, energy production, Coke and refined petroleum products, Chemical and chemical products, and Construction in Russia that are acting as either the center of transforming resources, as important suppliers or consumers for adjacent industries, or with weak symmetry and strong clustering, should be particularly analyzed. (4) Key industries in Russia play an important role as consumers of German machinery and equipment; the United States’ professional, scientific, and technical activities; and as suppliers for Chinese coke and refined petroleum products and the Japanese construction industry. Finally, corresponding policy suggestions are put forward.