We find that firms in the lower 25<sup>th</sup> percentile of sales and the 75<sup>th</sup> percentile of employment were more affected in the aftermath of Russia’s invasion of Ukraine than other firms. We try to explain the heterogeneity by examining two candidate structural factors: firms’ export links to Russia and digital gains prior to the invasion. Firms with export links to Russia are estimated to have suffered significantly more in terms of dropping sales and employment. We do not find any significant mitigating effect of digitization after the invasion shock that the existing literature would suggest. However, the results suggest that digitization helped firms increase employment on average during the studied period. While export links to Russia appear to increase sales on average during the studied period, this effect does not survive all the robustness tests we apply.

The remainder of the paper is organized as follows. Section 2 describes the employed data and their summary statistics. Section 3 explains the estimation approach and methodology. Section 4 discusses the results. Section 5 concludes and highlights some policy implications.

# 2. Data

We use data from the Business Pulse Survey (BPS) developed by the World Bank to measure the impact of the COVID-19 pandemic on the private sector. The Business Pulse Survey (BPS) is a novel dataset that tracks the potential impact of the pandemic on the private sector along critical dimensions of business performance, such as sales revenue, liquidity, and solvency, labor adjustments, adoption of technology, business expectations and uncertainty, and access to government support programs. In most countries, the survey interviews were conducted over the phone. The data include micro, small, medium, and large businesses across all main sectors (i.e., agriculture, manufacturing, retail, and other services, including construction). The sampling frame excluded micro-firms and/or businesses in agriculture in some countries. In other countries, when micro-businesses were included, the survey instrument offered simplified versions of some questions to facilitate data collection. The sampling frame in most countries where the BPS was not run as a follow-up of the Enterprise Survey was based on censuses from Statistics Agencies, Ministries of Finance or Economy, or business listings from Business Associations and typically only included registered businesses.

Our paper uses three waves of data from the Business Pulse Surveys for three Central Asian countries: the Kyrgyz Republic, Tajikistan, and Uzbekistan. The first wave was implemented in August-September 2020, the second wave was implemented in May-July 2021, and the third wave was implemented in March-May 2022. The survey data was collected by interviewing respondents on the phone. In Kyrgyzstan, 1,743 firms were interviewed in the first wave, 1,025 in the second wave, and 1,075 in the third wave. In Tajikistan, 1,690 firms were interviewed in the first wave, 1,032 in the second wave, and 1,031 in the third wave. In Uzbekistan, 1,886 firms were interviewed in the first wave, followed by 1,008 firms and 1,017 firms in the second and third waves, respectively. The sample frame was based on the statistical data from the National Statistical Committees of each country during the first wave in 2020. For the later waves, the list of companies was updated by using lists of business associations and internal lists of entrepreneurs from the survey firm. Data was collected on firms across all four sizes (micro, small, medium, and large) and four sectors (agriculture, manufacturing, retail, and other services).

The analysis in our paper is conducted using a balanced panel of firms. To limit the potential noise induced by the variation in our sample of firms across BPS waves, our analysis focuses on the set of firms interviewed in all three consecutive waves of the BPS survey implemented in the three Central Asian 4