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Foreign Trade in Eastern Europe's Transition: Early Results

In: The Transition in Eastern Europe, Volume 2, Restructuring

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  • Dani Rodrik

Abstract

By the end of 1991, Czechoslovakia, Hungary and Poland have achieved a substantial degree of openness to foreign trade. In all three countries, trade is now de-monopolized and licensing and quotas playa very small role. Exchange controls have virtually disappeared for current-account transactions. Judging by partner statistics, export performance has been impressive in all three countries, and import booms are under way in at least Hungary and Poland as well. However, there is no evidence that exporters have had any success in finding Western markets for the exports they have lost in Eastern markets. The collapse of the CMEA represents a significant shock, amounting to a loss of real income of 3 1/2 percent of GDP in Poland and 7-8 percent of GDP in Hungary and Czechoslovakia. Export performance is attributable to exchange-rate policy in part, but the collapse of domestic demand has possibly played an even more important role. Finally, trade liberalization so far appears to have had little effect on price discipline, in large part because of the substantial devaluations that have accompanied it
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Suggested Citation

  • Dani Rodrik, 1994. "Foreign Trade in Eastern Europe's Transition: Early Results," NBER Chapters, in: The Transition in Eastern Europe, Volume 2, Restructuring, pages 319-356, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:6730
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    References listed on IDEAS

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    1. Murphy, Kevin M. & Shleifer, Andrei, 1997. "Quality and trade," Journal of Development Economics, Elsevier, vol. 53(1), pages 1-15, June.
    2. Gabor Oblath & David Tarr, 2017. "The Terms-of-Trade Effects from the Elimination of State Trading in Soviet-Hungarian Trade," World Scientific Book Chapters, in: Trade Policies for Development and Transition, chapter 13, pages 295-313, World Scientific Publishing Co. Pte. Ltd..
    3. Peter B. Kenen, 1991. "Transitional Arrangements for Trade and Payments among the CMEA Countries," IMF Staff Papers, Palgrave Macmillan, vol. 38(2), pages 235-267, June.
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    Cited by:

    1. Kaminski, Bartlomiej & DEC, 1993. "How the market transition affected export performance in the Central European economies," Policy Research Working Paper Series 1179, The World Bank.
    2. Swati Basu & Saul Estrin & Jan Svejnar, 2005. "Employment Determination in Enterprises under Communism and in Transition: Evidence from Central Europe," ILR Review, Cornell University, ILR School, vol. 58(3), pages 353-369, April.
    3. Nathan Sheets & Simona Boata, 1998. "Eastern European Export Performance During The Transition," Contemporary Economic Policy, Western Economic Association International, vol. 16(2), pages 211-226, April.
    4. Jože P. Damijan & Igor Masten, 2002. "Time Dependent Efficiency of Free Trade Agreements - The Case of Slovenia and the CEFTA Agreement," The Economic and Social Review, Economic and Social Studies, vol. 33(1), pages 147-160.
    5. Walsh, Patrick Paul & Whelan, Ciara, 2001. "Firm performance and the political economy of corporate governance: survey evidence for Bulgaria, Hungary, Slovakia and Slovenia," Economic Systems, Elsevier, vol. 25(2), pages 85-112, June.
    6. Funke, Michael & Ruhwedel, Ralf, 2003. "Trade, product variety and welfare : a quantitative assessment for the transition economies in Central and Eastern Europe," BOFIT Discussion Papers 17/2003, Bank of Finland, Institute for Economies in Transition.
    7. Simona E. Cociuba, 2019. "The Collapse And Recovery Of The Capital Share In East Germany After 1989," Economic Inquiry, Western Economic Association International, vol. 57(4), pages 2035-2057, October.
    8. Kimakova, Alena & Rajabiun, Reza, 1999. "An Applied General Equilibrium Analysis of EU Integration for Hungary and Slovakia," Transition Economics Series 9, Institute for Advanced Studies.
    9. Paul Hare & Alan Bevan & Jon Stern & Saul Estrin, 2000. "Supply Responses in the Economies of the Former Soviet Union," CERT Discussion Papers 0009, Centre for Economic Reform and Transformation, Heriot Watt University.
    10. Karp, Larry, 1995. "The Direction and Timing of Agricultural Trade Refonn in Central and East Europe," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt9z61f67x, Department of Agricultural & Resource Economics, UC Berkeley.
    11. Facchini, Giovanni & Segnana, Maria Luigia, 2003. "Growth at the EU periphery: the next enlargement," The Quarterly Review of Economics and Finance, Elsevier, vol. 43(5), pages 827-862.
    12. Patricia S. Pollard, 1994. "Trade between the United States and Eastern Europe," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 25-46.
    13. Karp, Larry S. & Stefanou, Spiro E., 1995. "Prospects and Policy for Central and East European Agriculture," CUDARE Working Papers 6179, University of California, Berkeley, Department of Agricultural and Resource Economics.
    14. David Begg & Richard Portes, 1993. "Eastern Germany since unification: wage subsidies remain a better way," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 1(4), pages 383-400, December.
    15. 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.
    16. Sels, A.T.H., 2006. "Foreign direct investment as an entry mode. An application in emerging economies," Other publications TiSEM 583ca9b5-1691-425d-8f77-0, Tilburg University, School of Economics and Management.
    17. Dani Rodrik, 1993. "Trade Liberalization in Disinflation," NBER Working Papers 4419, National Bureau of Economic Research, Inc.
    18. Repkine, Alexandre & Walsh, Patrick Paul, 1999. "Evidence of European Trade and Investment U-Shaping Industrial Output in Bulgaria, Hungary, Poland, and Romania," Journal of Comparative Economics, Elsevier, vol. 27(4), pages 730-752, December.
    19. Swati Basu & Saul Estrin & Jan Svejnar, 2000. "Employment and Wages in Enterprises Under Communism and in Transition: Evidence from Central Europe and Russia," William Davidson Institute Working Papers Series 114, William Davidson Institute at the University of Michigan.
    20. Kazimierz Stanczak, 1992. "A Devaluation With Labor-Intensive Trading and Inelastic Labor Supply," UCLA Economics Working Papers 683, UCLA Department of Economics.
    21. Fardmanesh, Mohsen & Tan, Li, 2003. "Wage and price control policies in transition economies," Journal of Development Economics, Elsevier, vol. 70(1), pages 173-200, February.
    22. Larry Karp & Spiro Stefanou, 1994. "Domestic and trade policy for Central and East European agriculture1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 2(3), pages 345-371, September.
    23. repec:eee:labchp:v:3:y:1999:i:pb:p:2711-2805 is not listed on IDEAS
    24. Ciara Whelan & Patrick P. Walsh, 2000. "The importance of structural change in industry for growth," Open Access publications 10197/134, School of Economics, University College Dublin.
    25. Gerard Rpland, 2001. "The Political Economy of Transition," William Davidson Institute Working Papers Series 413, William Davidson Institute at the University of Michigan.

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    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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