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Does political disintegration lead to trade disintegration?

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  • José de Sousa
  • Olivier Lamotte

Abstract

Recent studies have found that political disintegration is a cause of severe and rapid trade disintegration in former Eastern European countries. This finding somewhat conflicts with another strand of the literature highlighting the fact that trade patterns change relatively slowly. This article aims at reconciling the apparent inconsistency between these two results. Using a theoretically grounded gravity equation, we evaluate the intensity of trade between successor states of three former countries (Czechoslovakia, the Soviet Union and Yugoslavia) in the period 1993-2001. We find no clear evidence that political disintegration leads to systematic and severe trade disintegration. This result is consistent with the patterns displayed by using simple descriptive statistics, is robust to sensitivity checks, and supports the idea of hysteresis in trade. Copyright (c) 2007 The Authors Journal compilation (c) 2007 The European Bank for Reconstruction and Development .

Suggested Citation

  • José de Sousa & Olivier Lamotte, 2007. "Does political disintegration lead to trade disintegration?," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 15, pages 825-843, October.
  • Handle: RePEc:bla:etrans:v:15:y:2007:i::p:825-843
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    Cited by:

    1. J.M.C. Santos Silva & Silvana Tenreyro, 2010. "Currency Unions in Prospect and Retrospect," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 51-74, September.
    2. Joze P. Damijan & Jose de Sousa & Olivier Lamotte, 2008. "Does international openness affect productivity of local firms? Evidence from Southeastern Europe," LICOS Discussion Papers 21908, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    3. Joze Damijan & José de Sousa & Olivier Lamotte, 2010. "Trade Liberalization in Southeastern Europe," Chapters,in: Global Exchange and Poverty, chapter 4 Edward Elgar Publishing.
    4. Libman, Alexander, 2008. "Informal regionalism in Central Asia: subnational and international levels," MPRA Paper 26417, University Library of Munich, Germany.
    5. repec:dau:papers:123456789/10246 is not listed on IDEAS
    6. Maria Stella Chiaruttini, 2014. "EU, Russia and the reshaping of the post-Soviet economic space: an international trade analysis," ERSA conference papers ersa14p764, European Regional Science Association.

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