TD NEREUS 05-2022
Eduardo A. Haddad, Inácio F. Araújo, Ademir Rocha and Karina Sass
The Russian invasion of Ukraine on February 24, 2022, scaled up the ongoing conflict in Donbas beyond its regional borders, hindering and halting different aspects of economic life. Considering the internal geography of Ukraine’s economic structure, the damages to physical infrastructure and supply chain disruptions are likely to propagate to other parts of the country through an intricate plot of production and income linkages. From a disaggregated analysis of multiregional and multisectoral linkages, this paper offers a systematic, integrated account of the structural linkages that allows modeling spillovers from one Ukrainian region to another. This approach breaks new ground by highlighting the internal economic effects of the conflict in Ukraine. We develop an interregional input-output system for Ukraine, providing the numerical basis for developing analytical frameworks to support knowledge building in the recovery process of distressed territories during the post-war period. We offer this database to the international scientific community to support modeling projects focusing on structural features of the Ukrainian economy. As shown in our illustrative exercises, understanding the structure of intersectoral and interregional linkages is critical to understanding better the propagation of exogenous shocks in the economy.