Academics at the Yale School of Management have found that revenue drawn from the (near) 1,000 companies curtailing or ending operations in Russia is equivalent to approximately 45% of Russia’s gross domestic product (GDP). 

“This is an approximation, so note that some companies, such as Pepsi, are continuing some sales in Russia but have pulled back on others, so it is impossible to say that every dollar from that 45% is now lost,” explains Steven Tian, research director at the Yale Chief Executive Leadership Institute. “Nonetheless, the sum is staggering and really emphasises the magnitude of this business withdrawal.”

Tian is part of the Yale team that has produced the definitive, go-to list of companies withdrawing or staying in Russia, which is still being updated at time of writing. 

More money is being lost than Russia could have expected 

Yale’s finding may come as a surprise to some observers, since foreign direct investment (FDI) does not matter that much to the Russian market. In fact, in 2020, it only accounted for 0.63% of the country’s GDP, significantly less than the global average, and this was not just a one-off. 

However, Yale’s research shows just how much taxable money foreign companies were making in Russia, and just how much Russia’s domestic market was using their services.

“Yes, FDI is not a primary driver of the Russian economy, but it relates to more than just fixed assets and capital expenditure,” says Tian. “Russians buy more goods and services from Western companies than one would think at first glance, as our analyses are showing, and the Russian economy is not the oil-exporting monolith that outsiders commonly perceive it to be.”

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Russian exports of oil and oil products are equivalent to only approximately 12% of the country’s GDP, while gas exports are equivalent to approximately 3% of GDP – and are continuing to decline over time, as even the Russian government admits. Other commodity exports, mostly agricultural, account for another 8% or so of GDP. 

Imports into Russia, on the other hand, are equivalent to approximately 20% of GDP – so while Russia is still, on balance, a net exporter, even as it is forced to sell oil and gas at highly discounted prices, its share of imported goods is far from trivial, according to Tian. 

“In short, the revenue drawn by our list of nearly 1,000 companies, equivalent to approximtely 45% of Russian GDP, is of significantly greater magnitude than the much-ballyhooed oil exports, which are being sold at a discount right now anyway,” he adds.