Economic Sanctions and Regional Differences: Evidence from Sanctions on Russia

Abstract

The objective of this study was to analyze the relationship between economic sanctions and regional differences within Russia from three perspectives: regional favoritism of the political elite, industry development, and trade costs. Using the nighttime lights in Russia, we found a correlation between economic sanctions and regional differences. First, as sanctions increased, the lights of Moscow, St. Petersburg, and provincial capitals were brighter than those of the rest of the country. Second, the lights of manufacturing cities were brighter as sanctions increased. However, under the influence of sanctions, the lights of mining areas of Russia were dimmer than those of other areas. Finally, there were relatively more economic activities in areas close to the Chinese border. The lights of Blagoveshchensk were brighter than that of the rest of the country. In addition, the relationship between economic sanctions and the brightness of lights had the characteristics of stages. There was a negative correlation with the brightness of Russian lights in the early stages of economic sanctions. However, this negative correlation disappeared in the later stages.