Conferences and seminars Department of Economic Geography | SGH

Scientific seminar “Economic, social and geopolitical consequences of the war in Ukraine”

Date: November 17, 2022, 10:00 a.m. - 1:00 p.m.
Venue: room A-9, building A

The war in Ukraine, which began on February 24, 2022 with the armed invasion of the Russian Federation, has had a catastrophic impact not only on the countries that are directly parties to the conflict, but also on the entire international community. The war has contributed, among other things, to a decrease in industrial production, disruption of supply chains, an increase in food and energy prices, as well as to the escalation of tensions in international financial markets and political relations. It is not without significance that the economic shock caused by the war occurred immediately after the disruptions on global markets caused by the COVID-19 pandemic.
Due to the geographical location of Poland, which borders the countries that are parties to the conflict, there is an additional factor that intensifies the negative effects of the war. This is due not only to the risk of escalation of armed confrontation outside the territory of Ukraine and the associated potential outflow of foreign investments, but also to the huge wave of migration that has been observed since the first days of the conflict.

Considering the broad spectrum of the impact of the war on the world economy, including the Polish economy, it is reasonable not to cease striving to identify new channels of influence and study the dependencies resulting from the war on the economy and management. In order to disseminate research conducted in this area, the Department of Economic Geography and the Department of Economics II organized a scientific seminar devoted to the economic, social and geopolitical consequences of the war in Ukraine.

Seminar program:

Introduction to the discussion: dr hab. Dorota Niedziółka, prof. SGH & prof. dr hab. Mariusz Próchniak
Geopolitical consequences of the war in Ukraine: dr Maciej Gurbała
The impact of the war in Ukraine on the financing of banks in Poland: dr Paweł Węgrzyn
The effects of the war in Ukraine in the context of the development of the electricity grid in Poland: mgr Krzysztof Skotarek
Coffee break
Russia, Ukraine and Douglass North’s economic theory of change: dr hab. Aleksander Sulejewicz, prof. SGH
The Russian invasion of Ukraine and the Polish zloty exchange rate: the fallacy of monetary autonomy?: dr Jakub Borowski & dr Krystian Jaworski
Covid-19 and the conflict in Ukraine as challenges for economic policy: dr Piotr Maszczyk & prof. dr hab. Mariusz Próchniak

Q&A session

Summary of the discussion: dr hab. Dorota Niedziółka, prof. SGH & prof. dr hab. Mariusz Próchniak

International Conference Space in the Contemporary Economy

Conference report

On June 9, 2018, an international conference entitled “Space in the Contemporary Economy” was held in a hybrid format at the Warsaw School of Economics. The conference was organized by the Department of Economic Geography (College of Business Administration). The event brought together many researchers and scientists from various academic centers. The conference was divided into three thematic sessions, with a discussion planned after each of them.

The conference was opened by the Vice-Rector for Development - Dr. Hab. Roman Sobiecki, prof. of the Warsaw School of Economics. In his speech, he emphasized that the conference is an important event in the history of the Department of Economic Geography, and the topic discussed is key to understanding current events. It is hard to imagine management without space. Contemporary space has many dimensions. Today’s space is no longer just physical space, but also virtual space. The latter is of particular importance in financial activity. This space creates specific challenges and threats. It is a theatre of spectacular actions, but also of consequences. The issues raised during this conference are to fill a certain gap in discussions that are conducted in connection with the implemented economic activity, i.e. how space can support economic efficiency.

Otwarcie konferencji - Prorektor dr hab. Roman Sobiecki, prof. SGH

opening of the conference - Vice-Rector dr hab. Roman Sobiecki, prof. SGH

The Vice-Dean of the College of Business Administration - dr hab. Małgorzata Poniatowska-Jaksch, prof. SGH also addressed a word of welcome to the participants. She pointed out that geography and spatial aspects are beginning to be appreciated, as well as the way in which it explains the world. The current political situation and the advancing digitalization encourage us to rediscover space. The issues discussed at the conference are at the heart of the current political and economic situation.

wystąpienie - Prodziekan KNoP dr hab. Małgorzata Poniatowska-Jaksch, prof.SGH

speech - Vice-Dean dr hab. Małgorzata Poniatowska-Jaksch, prof. SGH

The scientific director of the conference - dr hab. Dorota Niedziółka, prof. SGH, expressed her joy that the oldest department at SGH - the Department of Economic Geography - can host such distinguished guests. Discussions, publications and research on the conditions of functioning in space are taking on a new meaning. The Department notices these changes and tries to answer the question: what role space has played, plays and will play. Hence the idea to organize a conference on space. Talking about space has its reference in current events. On a daily basis, it seems that space is a “silent background of events”. Meanwhile, recent events (the period of the pandemic and the resulting closure of economies, the ongoing war in Ukraine) encourage us to take a new look at the role space plays, both in creating the conditions for locating business activities, the costs of running them, and in shaping security (of individual industries, food security and state security). Space has always been a value and has had value. Today, there is a return to the discussion on whether space is not one of the most important elements that determine the specific profitability and costs of human activity. Space also determines access to resources, and specific places in this space make it useful for tourist and transport activities. Space is also given a strategic context, related to the accessibility of places, their political and military significance. The issues of the conference draw attention to which places are important; what space and what values will constitute the premise for functioning, conducting business; how this space will influence social behavior, intensify or weaken migration movements; will cause the superpower and political ambitions of states to influence what is currently a theater of not only economic but also political activities.

wystąpienie - dr hab. Dorota Niedziółka, prof. SGH Kierownik Katedry Geografii Ekonomicznej

speech - dr hab. Dorota Niedziółka, prof. SGH,
Head of the Department of Economic Geography

The first session was held in English and concerned horizontal processes in the economy. The moderator of the session was dr Dariusz Kotlewski (Department of Economic Geography, SGH). The speech by dr Aneta Teperek (International Institute of Research and Technology Transfer) and dr Maciej Gurbała (Department of Economic Geography, SGH) concerned the relationship between geographical determinism and the development of countries with low economic potential. The thesis of the speech came down to the statement that the development of the world is uneven and to a large extent geographical conditions are the basis of these inequalities. The concept of geographical determinism has its source in the views of 19th-century thinkers, such as Charles Darwin, Gregor Mendel, Carl Ritter and Alexander von Humboldt. The diversity of the world’s countries is visible in the example of countries that generate the smallest GDP. The authors argued that 93 countries in the world (out of about 200) together produce only 1% of the world’s GDP. In 2019, these economies generated a combined GDP of USD 877.3 billion. The differences between these countries concern many areas. These include: the level of socio-economic development, population, size of the occupied area, climatic conditions, historical, cultural, religious conditions and political system. The conclusion of the speech was that natural conditions significantly determine the socio-economic development of the countries discussed, but at present they do not provide answers to all questions about the reasons for the failures of many of them. The explanation of these troubling issues should therefore be sought not only in geographical determinism, but also in institutional economics, to which aspects the authors’ next article will be devoted.

speech - dr Maciej Gurbała

The speech of dr Tomasz Wiśniewski (Institute of International Economic Policy, Warsaw School of Economics) was devoted to the spatial determinants of foreign direct investment. Foreign direct investment is related to the issue of location and is one of the areas of interest of economic geography. They are variable and cyclical, but are perceived (compared to other types of capital) as relatively stable financial resources that the economy can obtain. In the years 1990-2019, the share of FDI in GDP in Poland was on average 2.95%, which is slightly higher than for the world in the same period (i.e. 2.48%), but lower than for the EU (3.62%). It is estimated that in the mentioned period, from PLN 940 billion to PLN 1 trillion flowed into Poland as part of FDI. The inflow of these funds to the economy was possible thanks to the institutional changes made and the improvement of infrastructure. The author notices a strong statistical correlation between the inflow of FDI and the population of the territorial unit absorbing these funds. In addition, the proximity of the voivodeship border to the EU border had some significant significance, but over time this aspect lost its significance. However, no convergence was observed between the size of the inflow of FDI and the area of the voivodeship and the proximity of the location to the state border. The preliminary results of the analysis indicate that it is the human capital and its potential (labor supply and aggregate demand) of the voivodeships that is the key determinant influencing the decisions of foreign investors regarding investing in Poland.

The topic of the speech by Dr. Małgorzata Godlewska (Department of Administrative and Financial Law of Enterprises, Warsaw School of Economics) was related to the importance of space in the involvement of local government authorities in the creation of innovation networks. The presented analysis and its results were related to the research project carried out by the author and financed by the National Science Center entitled “Comparison of institutional pathologies of innovation networks in Poland and Hungary”. The support environment for regional innovation systems is understood more broadly than the space itself in geographical terms. It includes such components as: institutional, economic, geographical, demographic, cultural, political, managerial and administrative factors. Innovation networks are more important for the success of the innovation process than investments in research and development activities alone. Innovation networks can accelerate this process, because this results from their local anchoring and knowledge flows. Although engaging in innovation networks is not the strongest point of Polish local governments, representatives of local authorities indicate the need to belong to such forms of cooperation, because they integrate the local environment and have a positive impact on the innovation process. Previous experience and cooperation of local governments with specialized local organizations give a greater chance for the success of such cooperation in the future.

The relevance and political context of the issues raised during the conference, to which the Vice-Dean of the College of Business Administration referred during the opening of the conference, was particularly visible in the speech of Dr. Galyna Trypolska (Department of Economic Geography, Warsaw School of Economics). It was devoted to the Russian-Ukrainian war and its impact on the natural environment and energy sector of Ukraine. According to the Ministry of Economy of Ukraine, losses by the end of May 2022 reached USD 600 billion, including infrastructure damage of USD 97.4 billion. The International Monetary Fund estimates that due to Russian aggression, the country’s GDP will fall by 35% compared to 2021. The territory occupied by hostile troops amounted to 20% (i.e. 125 thousand km², which is more than the combined area of Belgium, the Netherlands and Luxembourg). Losses related to energy concern the physical destruction of part of the power plant by the occupier (out of 15 operating units, 7). Domestic natural gas production has fallen, and supplies of diesel oil and other fuels from Belarus and Russia have been suspended. Hard coal production in state-owned mines has fallen by 30% (some of them have been flooded, e.g. Zolote and Toshkivska). The amount of energy obtained from renewable sources has also fallen (mainly from photovoltaic installations located in the southeastern part of Ukraine). Energy consumption has also fallen by 37% year-on-year (May 2022 - May 2021). In addition, there has been a large-scale migration of the population, a decline in industrial production, and the energy transmission infrastructure has been destroyed. At the beginning of June 2022, 657 thousand citizens had no access to electricity, and 163 thousand - to natural gas. The synchronization of Ukraine’s energy system with the European ENTSO-E transmission network has enabled the sale of electricity to Poland (210 MW) and Moldova (197 MW). The plan to launch a 400kV cross-border link between Poland and Ukraine will enable the latter to export electricity up to 1 GW in 2023. As for the damage caused to the environment as a result of warfare, it is estimated that as much pollution was released into the atmosphere as a metallurgical company can emit in a year. As a result of military operations, the energy situation of the European Union, which was the main importer of energy resources from Russia, also deteriorated. In 2020, the share of supplies from Russia to the EU in the case of energy resources was as follows: crude oil - 27%, natural gas - 41% and hard coal - 47%. The current situation forces the EU to look for alternative directions of energy resource supplies and may contribute in the long term to a faster departure from non-renewable energy sources by EU countries towards climate neutrality.

The last speech in the English session, presented by Dr. Magdalena Suska (Department of European Integration and Law, Warsaw School of Economics), devoted to economic and trade relations between Ukraine and East Asian countries in the context of the ongoing war. If we look at trade between Ukraine and East Asian countries in the years 2005-2021, we can see an increase in trade turnover between these partners (in the period under review, the value of Ukrainian exports increased 5-fold, while imports increased 4-fold). China is Ukraine’s most important trading partner not only in terms of the Asian continent, but in general. Ukraine’s main export product to Asian countries is grain. Metal ores, iron and steel also occupy an important position in exports. A detailed analysis of the Herfindahl-Hirschman Index (HHI), the Revealed “Symmetric” Comparative Advantage Index (RSCA) and the Lafay index provides a more complete picture of Ukraine’s comparative advantage vis-à-vis Asian countries.

The second and third sessions were held in Polish. The moderator of both sessions was Dr. Jacek Brdulak, prof. SGH (Department of Economic Geography, SGH). The main topic of the second session was energy supply. The first presentation of this session, delivered by Dr. Honorata Nyga-Łukaszewska (Institute of International Economics, SGH) concerned energy resources in the context of sustainable international competitiveness and energy transformation. Sustainable competitiveness is understood as the sum of sustainable competitiveness and position. In the period 2000-2020, the share of hard coal mining decreased in the EU countries. While in 2000 the main countries extracting this energy resource were Germany, Poland, the Czech Republic and Spain, 20 years later the extraction took place mainly in Poland and the Czech Republic. Although the share of coal in electricity production in Poland is decreasing, it is still high and in 2020 amounted to 70%, while in the EU countries it was on average 14%. Based on the World Economic Forum data on the Global Competitiveness Index, we can see an increase Poland’s international competitiveness. Poland’s initial situation regarding the implementation of the energy transformation is less optimistic. Poland’s unfavourable position is visible in the case of the quality of energy infrastructure and sustainable use of resources. However, a trend is emerging in Poland regarding eco-innovation and the introduction of innovations in the energy sector. Poland is doing quite well in terms of fuel diversification (primarily natural gas supplies).

Reference to current events related to Russia’s aggression against Ukraine was also considered in the speech of Dr. Maciej Mróz (Department of Economic Geography, Warsaw School of Economics), devoted to the energy security of Central and Eastern Europe. The departure from energy resources imported from Russia to the EU is already determined by EU policy (embargo on Russian oil). For 30 years, there has been a progressive diversification of oil supplies to the EU, but the community is still strongly dependent on supplies from the East. The diversification of oil supply sources is particularly visible in Western European countries (Germany, Spain, France, Italy and the Netherlands). All definitions of energy security take into account two aspects: stability of energy supply and acceptable price. A gradual departure from Russian raw material supplies in the EU can be achieved through: diversification of supply directions, expansion of transmission infrastructure within the EU, increase in storage capacity of energy raw materials, increase in domestic raw material extraction, reduction of demand (including by improving energy efficiency) and substitution of Russian raw materials, and development of renewable energy sources (RES).

The economic and political context of the development of RES was raised in the speech of Dr. Krzysztof Księżopolski (Department of Public Policy, Warsaw School of Economics). The levelized cost of electricity (LCOE) results from the location of energy sources, and these are strongly dependent on geographical conditions (sunlight, wind power, etc.). This cost should be taken into account throughout the life of a given installation. In the case of RES, the issue of variability of raw material prices is removed from the considerations. When it comes to the development of RES installations, there should be appropriate provisions in the law (spatial development plans, development strategies of local government units) to ensure that such implementations do not arouse tensions in local communities.

Poland’s international competitiveness. Poland’s initial situation regarding the implementation of the energy transformation is less optimistic. Poland’s unfavourable position is visible in the case of the quality of energy infrastructure and sustainable use of resources. However, a trend is emerging in Poland regarding eco-innovation and the introduction of innovations in the energy sector. Poland is doing quite well in terms of fuel diversification (primarily natural gas supplies).

he spatial aspects of eliminating socio-economic differences between countries and the effectiveness of this aid were discussed in the presentation entitled “Monocultural aspects of the aid and transfer Dutch disease of the Global South”, presented to the conference participants by Dr. Michał Jasiński (J. Monnet Chair of the European Union, Warsaw School of Economics). The aid and transfer Dutch disease is a specific form of the Dutch disease, caused by financial resources from development aid and remittances from migrants. Some countries / economies are dependent on development aid because it lasts a long time, has a demotivating effect on the recipients and is therefore ineffective. The residents of the countries discussed migrate and transfer funds to their countries, including their family members. The dependence of many countries on development aid is only part of the answer when one looks for an explanation of why these countries still present a low level of socio-economic development. The answer to the question of where the persistent underdevelopment of many of these areas comes from, despite the international aid received, is supplemented by the growing inflow of money transfers from citizens who emigrated. It is not yet possible to examine the impact of aid funds and money transfers for the last 2 years, i.e. since the appearance of covid. Therefore, the content presented in the speech is based on data from before the pandemic. The countries of the Global South are not a uniform group. This group is represented not only by underdeveloped countries and countries with an unfavorable geographical location, but also by island states and countries with access to the sea. In his presentation, the author presented the MIRAB model, a development model that characterizes island states. They have two main sources of budget revenues: remittances from migrants and funds from development aid. A certain inconvenience and research limitation is the approach represented by some international institutions. For example, the World Bank only takes into account funds that have passed through the banking system. Meanwhile, some researchers argue that migrants often transfer funds through channels other than just banking. Hence, conservative estimates of the size and quantity of money transfers transferred by migrants lead to claims that their amount is twice as high as the amount of funds transferred officially. The current economic situation in Central and Eastern Europe, Ukraine and Russia was presented in their speech by Dr. Habil. Dorota Niedziółka (Department of Economic Geography, Warsaw School of Economics) and Dr. Habil. Mariusz Próchniak (Department of Economics II, Warsaw School of Economics). The authors paid special attention to the impact of raw material prices, limited access to them, and the war in Ukraine and its effects on the economic situation in the region. The economies of Ukraine and Russia are not very innovative and are characterized by low economic potential for their capabilities. The weakness of the economies of Ukraine and Russia shows the lack of resistance of these countries to price increases - this results from the weakness of economic policy and low quality of institutions. In 2021, i.e. before the war in Ukraine began, three countries - Ukraine, Russia, Belarus - were the countries of Central and Eastern Europe in which the inflation rate was the highest. Ukraine, to a large extent, bases its economic position on the first sector of the economy (almost 11% of added value is created in this sector); compared to the other countries discussed, it is clear that Ukraine is a food basin and this war may have a very negative impact on the general food situation in the world, the effects of which are already partially visible. Despite the low level of innovation, basing their economy on the production of low-processed goods, Russia and Ukraine spend a large part of their GDP on armaments (4.3% and 4.1%, respectively); this is a much larger order of magnitude than in other CEE countries. A large part of GDP is therefore directed to purposes other than consumption or investment. These three countries (Russia, Ukraine and Belarus) also do poorly when it comes to the use of energy from renewable sources. In terms of the consumption of energy from renewable sources, Russia, Ukraine and Belarus are at the very end of the ranking among the countries analyzed (3.2%, 6.9% and 7.2%, respectively), while in Latvia and Montenegro it is over 40%. The level of GDP in Russia, Ukraine and Belarus is much lower than it would result from the population potential and the area of these countries. Compared to other countries of Central and Eastern Europe, Russia and Ukraine (and especially Russia) are characterized by a low level of economic openness. In the case of Russia, foreign trade does not play such a significant role. If we measure this phenomenon by the sum of exports and imports in GDP (data for 2020), then among the countries discussed, this value was the lowest in Russia (50% of GDP). This means that even before the outbreak of the war, Russia was a fairly closed economy (this was due to political reasons and a small (innovativeness of its economy). The contribution of individual sectors to GDP, and thus the structure of the economy, is also reflected in the structure of exports: Ukraine mainly exports food (45% of exports), while Russia mainly exports fuels (42%). These are therefore economies that are not very diversified, i.e. a shock in one sector can lead the economy into a deep crisis. Preventing food exports through ports on the Black Sea causes a great blow to the Ukrainian economy. On the other hand, the embargo on fuels from Russia will cause a blow to Russia. The six packages of sanctions imposed on Russia have far-reaching effects on its economy. Shortly after the introduction of the first package, sudden repercussions were visible: the closure of stock exchanges in Russia and a reduction in the currency reserves of the Russian Central Bank. In addition, it is worth mentioning the declines in the value of the ruble in the first days of the war (although Russia’s enforcement of settlements for raw materials in rubles increased its value and the Russian Central Bank had to take action to weaken the currency). All this means that the ruble is currently one of the world’s rapidly strengthening currencies. As a result of the sanctions imposed on Russia, a sell-off of Russian assets was observed, inflation accelerated (12.5% in March 2022); restrictions also affected the services sector, including the tourism and transport industry (aviation was particularly affected); the automotive and oil industries in Russia recorded large losses. However, it was not only Russia that felt the heavy effects of the sanctions, but also other countries in the world. One of the main consequences of Russia’s isolation in world trade is the increase in the prices of raw materials and products as a result of reduced supply (this can be seen in the hydrocarbon, agricultural and chemical markets). Russia is the largest producer of ammonium nitrate and potassium salt, i.e. key components of fertilizers. The risk of doing business arose due to the high volatility of natural gas prices and the threat of supply disruptions (Russia controls 25% of global natural gas exports and 18% of coal exports; it is also responsible for 14% of platinum supplies and 11% of oil exports). Rising energy prices are causing and may cause stagflation in the European Union and other countries of the world. It is worth mentioning that the effects of sanctions are also positive for EU countries: faster transition towards renewable energy sources, faster independence from Russia. There is also a faster diversification of energy suppliers. Some countries outside the EU may also benefit from sanctions imposed on Russia (examples include Venezuela and Iran, which may start to play a greater role in oil exports). Inflation is certainly unfavourable for all countries, and in many countries of Central and Eastern Europe it is already double-digit.

goście uczestniczący w obradach (poza uczestnikami w trybie zdalnym)

guests participating in the proceedings (apart from remote participants)

Summarizing the proceedings, the scientific director of the conference – dr hab. Dorota Niedziółka – announced that the research questions and scientific problems posed, as well as the way of looking at economic and social processes, found their reference in this conference. There were also many answers to everything that interests us scientifically, but also worries us in human speculations about “how it should be”. This conference is also proof that what seems so transparent and invisible to activity, i.e. space, is in fact an extremely important background. The value of space is of significant importance for the assessment of conditions, activity, presence and what will happen in the future, i.e. the prospects of the operation of states and enterprises. Issues related to space are therefore still relevant and can provide a fantastic background for further discussions.

Prepared by dr Maciej Gurbała