Analysis of the impact of EU sanctions against Russia on Czech exports in the automotive industry from 2014 to 2025

This bachelor’s thesis analyses the impact of European Union sanctions against Russia on Czech exports in the automotive industry, specifically in the category of passenger cars classified under CN 8703. The aim of the thesis is to evaluate whether the sanctions introduced after 2014 and subsequently expanded after 2022 led to a decline in Czech exports to Russia, and whether this decline was compensated by the redirection of export to alternative destinations. The theoretical part defines economic sanctions, their objectives, mechanisms and effects on international trade and the balance of payments. The empirical part uses quarterly data for the period 2010–2025 and combines several empirical approaches. The VARX model is used to analyse dynamic relationships between Czech exports to Russia and exports to India, the United Arab Emirates, Turkey, Morocco, China, and EU countries. IRF and FEVD are used to examine whether a negative shock to export to Russia triggered responses in other export series. In addition, DiD, CITS, PPML, and Asinh-FE models are used to compare the development of Czech exports with Swedish exports to Russia. The results show that the sanctions had a negative impact on Czech exports of passenger cars to Russia, with exports approaching zero after 2022. Export redirection appeared only partially, especially in the case of India and the UAE, while no substitution effect was confirmed for the other destinations. The thesis therefore concludes that the loss of the Russian market was not fully compensated by a shift of exports to selected alternative destinations.