THE IMPACT OF WAR ON TRADE: A CASE STUDY OF UKRAINE’S TOBACCO INDUSTRY

Abstract

The article examines the transformations in Ukraine’s international trade of tobacco products between 2010 and 2023. The authors focused on trade dynamics, structural shifts, and the resilience of the tobacco industry amid geopolitical and economic disruptions. The war in Ukraine has adversely affected all aspects of economic development, causing radical changes in international trade. Since 2014, Ukraine has gradually reduced its economic dependence on the Russian Federation by expanding export markets and restructuring its trade framework. Despite maintaining a negative trade balance over the past 14 years, the tobacco industry remains a highly dynamic sector that attracts significant foreign direct investment, generates employment opportunities, and contributes to tax revenues. The study is based on a quantitative analysis of statistical data from UN Comtrade Analytics (2024) and other official sources, as well as qualitative assessments from experts and legislative developments. The research methodology includes induction, deduction, generalization, and comparative analysis. The findings indicate that between 2010 and 2021, tobacco trade volumes experienced growth; however, in 2022, trade declined by 49% due to war. In 2023, a partial recovery (+6%) was observed, though it was primarily driven by increased imports rather than exports. The geographical structure of trade underwent significant shifts: imports from Russian Federation were completely halted in 2022, while Italy became Ukraine’s primary supplier of tobacco products. The export structure remained relatively stable, although in 2023, Saudi Arabia emerged as Ukraine’s leading export destination, surpassing traditional trade partners. A significant portion of exported manufactured tobacco products highlights the strength of the Ukrainian tobacco industry and its importance as a processing hub, despite facing economic and geopolitical challenges. The authors' conclusions highlight the tobacco industry’s role as a value-added sector and its relative resilience to economic crises. Prospects for further research include assessment of the long-term consequences of the war, regulatory changes, and the adaptation of Ukraine’s tobacco sector to global challenges.