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Trade cooperation between Russia and Korea during the period of sanctions 2014-2017: Implications for trade policy
A discussion about impact of Western sanction on the Russian economy and on Russia’s trade with its partners is ongoing(Veebel&Markus 2015; Crozet&Hinz 2016, 2017; Dolidze 2015; Korhonen et al 2018). Studies agree that trade with Russia’s main economic partner the European Union had contracted sharply following restrictive measures adopted by both the EU and Russia (Crozet&Hinz 2016, 2017; Dreger et al 2016). An impact of Western sanctions on Russia’s trade with non-sanctioning countries has not received much attention so far and requires academic investigation in order to understand a broader impact of sanctions. Trade with Republic Korea can be a good object of study because the country is an important economic partner for Russia in East Asia and takes an active part in state projects for the development of the Russian Far East. Republic of Korea (further Korea) did not support the sanctions although there was a pressure on the government to do so (‘US demands Korea’s participation’ 2014). Moreover, in the course of its New Norther Politics, Korea continued to view Russia as an important economic partner. So, the question that is asked in this research is whether Russian-Korean trade suffered as a result of sanctions and what it can mean for the future trade policy regarding mutual cooperation.
To find an answer, several major points are discussed in the paper, them being dynamics of bilateral trade flows between Russia and Korea and of their structure during 2014-2017; reaction of Korean businesses that invest in Russia towards sanctions. Connection between trade and investment is straightforward as investment projects generate trade flows, coherence between trade, investment and trade policy is a key to development in general. Moreover, trade plays a crucial role in investment decisions, according to OECD exploratory survey (Duval 2008). Therefore, actions of Korean companies, who are major investors in bi-lateral relations, can provide additional information about the effect of restrictive measures imposed by the West.