Manufacturing Exports, Institutional Qualities, and Dutch Disease in Post-Soviet Economies

Post-Soviet economies have experienced challenges due to the imperfect shift toward a market-based framework, influenced by the adverse legacies of the Soviet Union. This study evaluates the export values of manufactured goods in post-Soviet economies using a structural gravity trade model and analyzes the quantitative contributions of institutional immaturity and Dutch Disease to the underperformance of their manufacturing exports. The main findings are highlighted as follows. Most of post-Soviet economies have demonstrated subpar performance in their manufacturing exports compared to the benchmark economies of Estonia, Latvia, and Lithuania. Institutional immaturity concerning government effectiveness represents approximately 30% of this underperformance, whereas the Dutch Disease effect contributes 10% to this underperformance in some resource-rich economies, such as Azerbaijan, Kazakhstan, and Mongolia. The analyses suggest policy implications that enhancing government effectiveness in post-Soviet economies to the benchmarks of Estonia, Latvia, and Lithuania could potentially expand the respective economies’ manufacturing exports.