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Globalization and Inequality in CIS Countries: Role of Institutions

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  • Ksenia Yudaeva

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    (Centre for Economic and Financial Research (CEFIR), and Carnegie Endowment for International Peace)

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    Abstract

    The process of opening and integration into the world economy in the CIS countries has been part of a more complex process of transition from the planned to market economy. Over the last 10 years most of these countries have liberalized their trade regimes versus non-CIS countries, introduced their own currency, and to some extent liberalized flows of direct and portfolio investment. These and other reforms were accompanied by a pronounced output decline, an increase in poverty rates and inequality indexes. Of course, most of these changes in output and income inequality are attributable to the transition process. However, it is still interesting to know whether globalization and trade opening have enhanced or, on the contrary, decreased the negative effect of transition on incomes in transition countries. Comparison of outcomes in various countries suggests that trade policy per se was less important than the ability of governments to enforce it. Countries, where reforms were implemented slowly, but the government institutions did not collapse, experienced smaller overall output decline, and smaller increase in inequality. Countries with weak governments often performed as “passive globalizers”: the trade-to-GDP ratios in them were quite high, partly accounting for capital flight. In contrast to active globalizers, output in these countries declined, while poverty and inequality increased. However, the worst results were seen in countries cut off from international trade, because of being landlocked or at war or in bad economic relations with the neighboring countries.

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    Paper provided by Center for Economic and Financial Research (CEFIR) in its series Working Papers with number w0025.

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    Length: 35 pages
    Date of creation: Dec 2002
    Date of revision:
    Handle: RePEc:cfr:cefirw:w0025

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    1. Luttmer, Erzo F.P., 2001. "Measuring poverty dynammics and inequality in transition economies - disentangling real events from noisy data," Policy Research Working Paper Series 2549, The World Bank.
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    Cited by:
    1. Mihaly Simai, 2006. "Poverty and Inequality in Eastern Europe and the CIS Transition Economies," Working Papers, United Nations, Department of Economics and Social Affairs 17, United Nations, Department of Economics and Social Affairs.
    2. Yuri Yegorov, 2011. "Economic Growth and Demography," DEGIT Conference Papers c016_061, DEGIT, Dynamics, Economic Growth, and International Trade.

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