Oleksandr Shepotylo (Aston University) - Firms, Infrastructure, and Port Blockade

BOFIT-seminaarit

BOFIT Seminar - Oleksandr Shepotylo (Aston University) - Firms, Infrastructure, and Port Blockade

Co-author: Mykola Ryzhenkov (Osnabrück University)

Abstract
This paper examines how abrupt disruptions to maritime infrastructure reshape firm behavior, productivity, and trade patterns, using the 2022–2024 Russian naval blockade of Ukrainian Black Sea ports as a natural experiment. Leveraging firm-level financial statements and detailed product-level trade data, as well as geo-spatial data on firms, ports, major roads and railways in Ukraine, we develop a shift–share identification strategy to quantify exposure to blocked sea routes and estimate the resulting impact on productivity, mark-ups, employment, and revenue. We embed this empirical approach in a structural model of heterogeneous firms with endogenous transport mode choice, allowing us to trace causal mechanisms from transport shocks to firm outcomes.

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