Side-effects of a closeby war: Are foreign businesses leaving Russia to relocate in Kazakhstan? Synthetic controls and other impact evaluation methods.

Faculty Development Competitive Research Grant Program (General) 2024-2026

The world has been taken aback by Russia’s invasion of Ukraine. In the months following February 24, 2022, as the successive rounds of Western sanctions on Russia and Belarus took effect, it was reported that hundreds of Western firms had left the Russian Federation, sometimes selling but often abandoning precious assets. To the extent the Russian location was the foothold of a multinational
firm in Central Asia and a gateway for exporting or re-exporting, it is natural to expect a relocation of the same company in another spot in the region. Kazakhstan, with its immense area, its 7600 km border with Russia, its multi-vector foreign policy, and its voluntarist welcoming of foreign direct investment, offers plenty of opportunities for multinational firms seeking to establish a new settlement. Nobody knows, however, to what extent the current inflow of foreign investment projects is actually linked to the war situation, or to what extent Kazakhstan, with its position as a large and attractive neighbor, is or is not favored above other countries in the region, particularly countries which, being former Soviet republics, have a Russian-speaking population and tradition allowing to transplant the pre-war Russian activity relatively easily.