The terms-of-trade effects from the elimination of state trading in Soviet-Hungarian trade
AbstractEconomists have debated whether the Soviet Union subsidized trade with its Eastern European partners in the Council of Mutual Economic Assistance (CMEA). Effective January 1, 1991, former CMEA members implemented their"switchover"decision to convert to world market prices denominated in convertible currency. The switchover dramatically reduced the role of"state trading"by permitting direct enterprise to enterprise transactions denominated and settled in convertible currency. The authors made an intensive study of the trading relationship between Hungary and the Soviet Union as a case study on the terms-of-trade issue. A detailed empirical investigation of prices in Soviet-Hungarian trade before and after the switchover provides some indication of the terms-of-trade loss that Hungary is likely to suffer as a result of the switchover of its trading relationship with the Soviet Union. Contrary to conventional wisdom, the authors find that the majority of Hungarian firms exporting to the Soviet Union have been disfavored by the combination of the payments mechanism, exchange rate, tax and subsidy policies. The experience of early 1991 suggests a significant decline is likely to occur in Soviet imports from Hungary during the remainder of the year. A variety of problems account for the decline, many of them specific to internal conditions in the Soviet Union.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Comparative Economics.
Volume (Year): 16 (1992)
Issue (Month): 1 (March)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/622864
Other versions of this item:
- Oblath, Gabor & Tarr, David, 1991. "The terms-of-trade effects from the elimination of state trading in Soviet - Hungarian trade," Policy Research Working Paper Series 690, The World Bank.
- TF0 - - - - - -
- FUN - International Economics - - - - -
- OPE - Economic Development, Technological Change, and Growth - - - - -
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Brada, Josef C., 1985. "Soviet subsidization of Eastern Europe: The primacy of economics over politics?," Journal of Comparative Economics, Elsevier, vol. 9(1), pages 80-92, March.
- Brada, Josef C., 1988. "Interpreting the Soviet subsididzation of Eastern Europe," International Organization, Cambridge University Press, vol. 42(04), pages 639-658, September.
- Dani Rodrik, 1992.
"Making Sense of the Soviet Trade Shock in Eastern Europe: A Framework and Some Estimates,"
NBER Working Papers
4112, National Bureau of Economic Research, Inc.
- Rodrik, Dani, 1992. "Making Sense of the Soviet Trade Shock in Eastern Europe: A Framework and Some Estimates," CEPR Discussion Papers 705, C.E.P.R. Discussion Papers.
- Morris Morkre & David Tarr, 1995.
"Reforming Hungarian agricultural trade policy: A quantitative evaluation,"
Review of World Economics (Weltwirtschaftliches Archiv),
Springer, vol. 131(1), pages 106-131, March.
- Morkre, Morris & Tarr, David G., 1993. "Reforming Hungarian agricultural trade policy : a quantitative evaluation," Policy Research Working Paper Series 1185, The World Bank.
- Erzan, Refik & Holmes, Christopher & Safadi, Raed, 1992. "How changes in the former CMEA area may affect international trade in manufactures," Policy Research Working Paper Series 973, The World Bank.
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