Impact of war and geopolitical factors on foreign trade

Abstract

In the context of the current geopolitical transformations caused by the war in Ukraine, world trade is undergoing significant changes that emphasize the need to analyze the new geoeconomic reality. The war in Ukraine has become a catalyst for the restructuring of global trade chains, intensifying de-globalization processes that are shaping a sustainable preference for political loyalty over economic efficiency. The purpose of the article is to analyze the impact of the war in Ukraine and geopolitical factors on the dynamics of world foreign trade in 2016-2024, with a focus on structural changes in Ukraine's trade flows. The study applies an econometric panel regression model to estimate trade turnover, exports, imports, and their percentage changes, taking into account commodity prices, macroeconomic conditions, exchange rate, and time effects. The econometric model found that the war-induced rise in commodity prices significantly increased the turnover of commodity groups, particularly mineral products. Hryvnia devaluation stimulated exports, while global GDP growth had a weaker effect. Fuel and energy products showed low growth due to import restrictions. The model confirmed a high explanatory power (R² > 0.8) for trade turnover and emphasized the vulnerability of trade to geopolitical shocks that could hinder the recovery in 2024. Further research should focus on analyzing the long-term effects of the war and sanctions, including detailed data on logistical constraints and sanctions pressure, and assessing the impact of trade agreements with the EU on Ukrainian exports. Expanding the model to analyze trade in services and regional blocs will help develop strategies for adapting to the new geopolitical reality