Military conflicts and the performance of state-owned enterprises: A study of Ukraine's aerospace, defense, and electro-engineering industries before and after the 2014 Crimea and Donbas occupation

Abstract

This study addresses the under-researched role of state-owned-enterprises (SOEs) in global value chains/production networks (GVCs/GPNs). It examines how the economic performance, foreign trade, and value capture of Ukrainian firms-classified by ownership, position in GVCs/GPNs, size, and diversification of their customer base-have evolved following the Russia's occupation of Crimea and parts of Donbas in 2014. The study reveals significant differences in the distribution of SOEs, private, and foreign enterprises between the aerospace/defence and electro-engineering industries. Overall, since the Russian aggression in 2014, the aerospace and defence industries have outperformed electro-engineering firms, largely due to strong state support. The study concludes with broader observations that while even intensive mutual trade could not prevent the war, the war does not necessarily lead to a complete cessation of mutual trade.