The socio-economic situation in Crimea has changed under the influence of the political events of 2014. One of the key economy sectors, the effective functioning of which is necessary for the sustainable development of the region, is trade. In this regard, the research is dealt with the trade of Crimea and its role in the socio-economic development of the region. The results have shown that in 2014–2017 the internal trade of the region demonstrated higher development rates than in 2010–2013. The slight slowdown in trade development in general is solely due to the decrease in foreign trade, which, in turn, is partly due to a change in the settlement procedure, as well as to the overall Russian policy of import substitution. Thus, despite certain difficulties that are still typical for the trade of Crimea, the main problems of the industry have been solved currently or continue to be solved through state regulation measures. Further development of the trade industry will contribute to the improvement of the socio-economic situation in the region and the well-being of its residents.

1. http://www.iaeme.com/IJCIET/index.asp 48 editor@iaeme.com
International Journal of Civil Engineering and Technology (IJCIET)
Volume 9, Issue 12, December 2018, pp. 48–54, Article ID: IJCIET_09_12_007
Available online at http://www.iaeme.com/ijciet/issues.asp?JType=IJCIET&VType=9&IType=12
ISSN Print: 0976-6308 and ISSN Online: 0976-6316
© IAEME Publication Scopus Indexed
THE ROLE OF TRADE IN SOCIO-ECONOMIC
DEVELOPMENT OF CRIMEA
Olga Vladimirovna Rozhnova, Zhanna Arakelovna Kevorkova
Financial University under the Government of the Russian Federation, Leningradsky
Prospekt 49, Moscow, 125993, Russia
Irina Petrovna Komissarova
National Research Nuclear University MEPhI (Moscow Engineering Physics Institute),
Kashirskoe shosse, 31, Moscow, 115409, Russia
Elena Vladimirovna Luneva, Albina Nikolaevna Mayorova
Russian State Social University, Wilhelm Pieck Street, 4, build.1, Moscow, 129226, Russia
ABSTRACT
The socio-economic situation in Crimea has changed under the influence of the
political events of 2014. One of the key economy sectors, the effective functioning of
which is necessary for the sustainable development of the region, is trade. In this
regard, the research is dealt with the trade of Crimea and its role in the socio-economic
development of the region. The results have shown that in 2014–2017 the internal trade
of the region demonstrated higher development rates than in 2010–2013. The slight
slowdown in trade development in general is solely due to the decrease in foreign trade,
which, in turn, is partly due to a change in the settlement procedure, as well as to the
overall Russian policy of import substitution. Thus, despite certain difficulties that are
still typical for the trade of Crimea, the main problems of the industry have been solved
currently or continue to be solved through state regulation measures. Further
development of the trade industry will contribute to the improvement of the socio-
economic situation in the region and the well-being of its residents.
Keywords: trade, Crimea, socio-economic development, region, trade turnover,
consumer prices.
Cite this Article: Olga Vladimirovna Rozhnova, Zhanna Arakelovna Kevorkova, Irina
Petrovna Komissarova, Elena Vladimirovna Luneva and Albina Nikolaevna Mayorova,
the Role of Trade in Socio-Economic Development of Crimea, International Journal of
Civil Engineering and Technology, 9(12), 2018, pp. 48–54
http://www.iaeme.com/IJCIET/issues.asp?JType=IJCIET&VType=9&IType=12

2. Olga Vladimirovna Rozhnova, Zhanna Arakelovna Kevorkova, Irina Petrovna Komissarova,
Elena Vladimirovna Luneva and Albina Nikolaevna Mayorova
http://www.iaeme.com/IJCIET/index.asp 49 editor@iaeme.com
1. INTRODUCTION
The accession of Crimea to Russia in 2014 caused a wide political resonance and discussions
about its legitimacy both confirming and denying the lawfulness of Russian actions [1]-[2].
The change in the political situation has had significant economic consequences for the region
[3], mainly due to the imposition of economic sanctions by dissenting states and organizations.
In the current situation, the restoration and further strengthening of the Crimean economy, as
well as improving the welfare of its population, has become a particularly important task.
The conditions and efficiency of the trade industry have significant impact on the socio-
economic situation in the region. In 2017, trade provided 16% of the gross regional product in
Crimea, occupying second place in its structure after industry [4]. At that, 19.7% of economic
entities were engaged in this activity [5]. At the same time, trade performs important social
functions, such as providing the population with consumer goods and services, creating jobs,
and generating tax revenues in the form of taxes and fees [6]. In this regard, the present article
deals with the trade of Crimea and its role in the socio-economic development of the region.
2. LITERATURE REVIEW
The change in political status has affected the socio-economic situation in Crimea. Scientists,
on the one hand, point to the need to resolve negative economic phenomena and achieve
sustainable economic growth [7], and, on the other hand, note that the unification of the region
with Russia has given a new impetus to the development of the economy [8]. The improvement
of innovative infrastructure [9] and sustainable development of enterprises [10] are considered
important tasks of economic development of Crimea that is topical for the economy in general
and for the trade industry in particular.
The trade industry has faced the problem of destabilization of the physical distribution
system, caused by the number of factors such as violation of the transport accessibility of the
region and the existing economic relations, lack of complete and reliable information about the
market situation, possible sources of goods supply, etc., inefficient structure of investments
with a predominance of nonfinancial component, deterioration of the economic entities’
composition, insufficiently effective state regulation, and poor customer service quality
[12][14]. Currently, some of these problems have been already solved or are being solved
through the measures taken by the leadership of the state and the region to restore and further
develop the Republic of Crimea. However, given the great socio-economic importance of both
domestic and foreign trade, the study of its status and development in the context of its
influence on the socio-economic situation in the region still remains relevant.
3. METHODS
Analysis of trade and its role in the socio-economic development of Crimea is based on
statistical data of the State Statistics Service of Ukraine, the territorial body of State Statistics
Service [5] in the Republic of Crimea, the Ministry of Economic Development of the Republic
of Crimea, and the Federal Customs Service of Russia. Indicators characterizing the state and
development trends of domestic and foreign trade of Crimea in 2010–2013 and in 2014–2017
were identified and compared. At the second stage, development coefficients were calculated
for each indicator, i.e. the ratio of the indicator value for the last period to the average value of
the same indicator for the previous periods. Further, the coefficients of development of
domestic and foreign trade and the total coefficient of trade development are determined. For
this purpose, the standard formula of arithmetic mean is used. At the same time, the indicators,
the increase of which has negative impact on the development of the industry and the region at
large (the consumer price index, etc.), are taken in reverse.

3. The Role of Trade in Socio-Economic Development of Crimea
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4. RESULTS
The key indicator characterizing the status and development of the trade industry and its role
in the socio-economic development of the region is retail trade turnover. In 2010–2013, the
turnover of retail trade in Crimea in both actual and comparable prices showed a growth trend.
In 2013, the growth rate slowed, but amounted to 111.3%. The consumer price index for goods
and services, including food and nonalcoholic beverages, declined in total during the period
under review (development factor was equal to 0.95). Analysis of the financial results of
companies engaged in trading in Crimea in 2011–2013 showed trends of decreasing earnings
and increasing losses, which had led to a negative balance in 2013. At that, the proportion of
profitable traders increased from 62.5% in 2010 to 67.2% in 2014. Salary of trade workers had
been increasing steadily, and development factor amounted to 1.3. Foreign trade turnover had
increased by 2.4 times in 2011, which was due to the increase in imports. The latter, in turn,
was associated with the growth of purchases of electric machines from China. The export-
import coverage ratio, which had decreased to 0.5 in 2011 due to an increase in imports,
increased to 0.9 by 2013. Export of goods had shown constant growth, and its development
factor, equal to 1.29, was the maximum for foreign trade indicators
(Table 1).
Table 1 Trade dynamics of Crimea in 2010-2013
Indicator 2010 2011 2012 2013
Development
factor
Retail turnover in actual prices,
mln UAH
22,129 28,677 35,668 40,034 1.39
Retail turnover at comparable
prices, % to the previous year
108.4 114.7 120.8 111.3 0.97
Consumer price index for goods
and services, %
109.6 106 98.4 99.5 0.95
Consumer price index for food and
nonalcoholic beverages, %
111.4 103.2 96.1 98.3 0.95
The profit of the trade entities,
mln UAH
42,655.9 48,487.9 43,877.8 36,528.5 0.81
The loss of trade entities,
mln UAH
27,772.4 26,896.4 34,269.8 42,576.0 1.44
Proportion of profitable trade
entities in their total number, %
62.5 66.7 66 67.2 1.03
Proportion of unprofitable trade
entities in their total number, %
37.5 33.3 34 32.8 0.94
The average monthly salary of
trade personnel, UAH
1,877 2,342 2,704 3,010 1.30
Internal trade development factor 1.04
Foreign trade turnover, mln USD 890 2,142 2,324.2 1,960.2 1.10
Exports of goods, mln USD 563.3 676 888.8 914.9 1.29
Imports of goods, mln USD 326.7 1,466 1,435.4 1,045.3 0.97
Export-import coverage ratio 1.7 0.5 0.6 0.9 0.96
Foreign trade development factor 1.08
Resumptive trade development factor 1.05
Source: [6] calculations performed by the authors.

4. Olga Vladimirovna Rozhnova, Zhanna Arakelovna Kevorkova, Irina Petrovna Komissarova,
Elena Vladimirovna Luneva and Albina Nikolaevna Mayorova
http://www.iaeme.com/IJCIET/index.asp 51 editor@iaeme.com
After the events of 2014, the trade trends in Crimea have changed. While the retail trade
turnover in actual prices increased, in comparable prices it was changing unevenly. In 2014,
the prices of consumer goods and services increased by more than 40%, food and nonalcoholic
beverages – by more than 50%. In subsequent years, the growth of prices slowed down. In
2015–2017, the amount of profit and loss of trade increased with multiple excess of profit over
loss. The proportion of profitable trade entities, which previously were held between 60–70%,
increased to 87% in 2015. In 2016–2017, the proportion of profitable trade entities in their total
number was characterized by downtrend. In 2014, salary in trade sector was the lowest in the
region among all economy sectors, but until 2017 it showed an upward trend. All indicators of
foreign trade in the period under review were diminishing (Table 2).
Table 2 Trade dynamics of Crimea in 2014-2017
Indicator 2014 2015 2016 2017
Develop-
ment factor
Retail turnover in actual prices, mln
rubles
148,900 214,710.2 219,861.4 228,699.5 1.18
Retail turnover at comparable
prices, in % to the previous year
92.4 104 94.9 101.4 1.04
Consumer price index for goods
and services, %
142.5 127.6 107.2 101.4 0.81
Consumer price index for food and
non-alcoholic beverages, %
153.3 130.7 103.7 98.1 0.76
The profit of the trade entities, mln
rubles
n/a 2,598.4 2,357.8 6,849.6 2.76
The loss of trade entities,
mln rubles
n/a 255.4 314.1 497.5 1.75
Proportion of profitable trade
entities in their total number, %
66.7 87.0 77.1 73.8 0.96
Proportion of unprofitable trade
entities in their total number, %
33.3 13.0 22.9 26.2 1.14
The average monthly salary of
trade personnel, rubles
9,203 16,522 16,987 19,064 1.34
Internal trade development factor 1.25
Foreign trade turnover, mln USD 365 179.4 114.2 93.2 0.42
Exports of goods, mln USD 205.1 79.3 47.7 29.8 0.27
Imports of goods, mln USD 159.9 100.1 66.5 63.4 0.58
Export-import coverage ratio 1.3 0.8 0.7 0.5 0.50
Foreign trade development factor 0.44
Resumptive trade development factor 1.01
Source: [4, 5, 16]; calculations performed by the authors.
Thus, the changes in trade in Crimea, caused by the political situation, were both of positive
and negative nature. The negative consequences were the rise in prices and the reduction in
foreign trade, while positive consequences consisted in the excess of profit over loss, and the
increase in the proportion of profitable trade structures in their total number. At the same time,
in 2014–2017, domestic trade developed more intensively (the development factor equaled to
1.35) as compared to that in previous years. A slight slowdown in the development of the trade
sector in general is caused exclusively by a reduction in foreign trade.

5. The Role of Trade in Socio-Economic Development of Crimea
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5. DISCUSSION
The growth of consumer prices was the main problem of domestic trade in Crimea in 2014.
Measures taken to stabilize prices allowed reducing the rate of increase in prices of goods and
services to 101.4%, while of food and alcoholic beverages – to 98.1%. Thus, the problem of
rising prices in the region can be considered solved. In other respects, domestic trade in Crimea
has been developing more dynamically since 2014 than during the period of 2010–2013. This
confirms the fact that the status of the unrecognized territory is not an insurmountable obstacle
to economic growth [15].
The improvement of the physical distribution system, which requires the restructuring of
economic relations, improvement of transport infrastructure, the creation of large distribution
centers and optimization of procurement logistics will contribute to further development of
domestic trade in Crimea, and accordingly, improvement of the socio-economic situation in
the region [11], [18]. Then, it is necessary to restructure investments in trade with an increase
in the share of investments in the innovation component and intangible assets, which in modern
conditions are recognized as the main means of improving the retail efficiency and
competitiveness [19]. An important condition for the long-term social and economic stability
of Crimea is sustainable business development [10]. Sustainable development implies
corporate social responsibility, which at the same time is positively perceived and appreciated
by consumers, i.e. the population [20], as well as is beneficial for the trading business due to
the improvement of its business reputation and, accordingly, for market capitalization [21].
This direction is particularly relevant given the fact that the social responsibility of trade in
Ukraine is generally higher than that in Russia [22]. Simultaneously with the increase in social
responsibility of business, an important role in the development of the region is played by the
modernization of public administration taking into account social and socio-cultural aspects
[23]. Besides, extending trade networks and increasing the information security of trade entities
are significant directions in the development of domestic trade in Crimea that will allow
improving the socio-economic situation in the region.
While domestic trade in Crimea has been growing rapidly in recent years, foreign trade in
the region has been declined over the period from 2014 to 2017. However, one of the reasons
for the decline in foreign trade turnover was the change in the settlement procedure, as well as
the fact that the trade status with Russia has changed from foreign trade to domestic. Therefore,
the actual decline in foreign trade was not as strong as the statistics show. In addition, the
reduction in the region's imports corresponds to the import substitution policy currently
implemented in Russia.
6. CONCLUSION
Trade is one of the key sectors of the economy influencing directly the socio-economic
development of the region. The economy and, in particular, the trade sector of Crimea were
affected by the political events of 2014. However, in 2014–2017, the internal trade of the region
has shown a higher pace of development than that in 2010–2013. A slight slowdown in the
development of trade in general is exclusively due to a reduction in foreign trade, which, in
turn, is partly due to a change in the settlement procedure, and also complies with the all-
Russian policy of import substitution. Thus, despite certain difficulties that are still typical for
the trade of Crimea, the main problems of the industry have been solved currently or continue
to be solved through state regulation measures. Further development of the trade industry will
contribute to the improvement of the socio-economic situation in the region and the well-being
of its residents.

6. Olga Vladimirovna Rozhnova, Zhanna Arakelovna Kevorkova, Irina Petrovna Komissarova,
Elena Vladimirovna Luneva and Albina Nikolaevna Mayorova
http://www.iaeme.com/IJCIET/index.asp 53 editor@iaeme.com
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