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The Breadbasket in Crisis - A Neoclassical Trade Analysis of the Ukrainian Wheat Shock and its Impacts on EU Member States' Adjustments
Jönköping University, Jönköping International Business School, JIBS, Economics.
Jönköping University, Jönköping International Business School, JIBS, Economics.
2026 (English)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

The 2022 Russian invasion of Ukraine disrupted one of the world’s major agricultural-exporting economies. Ukraine’s pre-war role as a major wheat supplier can be understood through the Heckscher-Ohlin model, as the country’s fertile land endowment supported a comparative advantage in wheat production. However, the war created a major external shock to this trade structure.This thesis examines whether exposure to Ukrainian wheat imports shaped post-2022 adjustment patterns in domestic wheat production, total wheat imports, non-Ukraine wheat imports, and wheat self-sufficiency across 11 EU member states between 2018 and 2024. The study applies a two-way fixed-effects model with a continuous Difference-in-Differences interaction structure with country and year fixed effects, using exposure to Ukrainian wheat imports to capture differences in Ukrainian wheat dependence across countries and years. The empirical analysis is grounded in the Heckscher-Ohlin model and the Specific Factors model, which together explain both pre-war trade specialization and short-run adjustment constraints.The results do not provide statistically significant evidence of common average post-war changes in wheat production, imports, non-Ukraine imports, or self-sufficiency across the full sample. However, countries with higher exposure to Ukrainian wheat experienced relatively weaker domestic production and self-sufficiency outcomes after 2022. Evidence for total import adjustment is weaker, while the results do not show statistically significant exposure-driven reallocation toward non-Ukrainian suppliers. Overall, the findings suggest that short-run adjustment was constrained by immobile agricultural and logistical factors, supporting the relevance of the Specific Factors model in explaining limited supply-side adaptation during geopolitical shocks.

Place, publisher, year, edition, pages
2026. , p. 51
Keywords [en]
Difference-in-Difference (DiD), Trade Exposure, Wheat Market, Specific Factors Model, Trade Adjustment, Russia-Ukraine War
National Category
Economics
Identifiers
URN: urn:nbn:se:hj:diva-73005OAI: oai:DiVA.org:hj-73005DiVA, id: diva2:2078910
Subject / course
JIBS, Economics
Supervisors
Examiners
Available from: 2026-06-25 Created: 2026-06-24 Last updated: 2026-06-25Bibliographically approved

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CiteExportLink to record
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Citation style
  • apa
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More languages
Output format
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