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The Trading Potential of Eastern Europe


  • Wang, Z.K.
  • Winters, L.A.


This paper fits a gravity model to the trade of 76 market economies. It then applies the model to data on East European economies to estimate what their trading potential might have been, had behaved like market economies in the mid-1980s. At existing levels of national income, the liberalization of Eastern Europe and the Soviet Union is unlikely to affect their mutual trade and trade with developing countries, but it will increase trade with industrial counties by factors of three to thirty. West Germany and the USA are the principal beneficiaries of this new trade, increasing their exports and imports by over 20%. Trade must flow both ways, however: the West cannot increase its exports to the East without correspondingly increasing its imports.
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Suggested Citation

  • Wang, Z.K. & Winters, L.A., 1992. "The Trading Potential of Eastern Europe," Discussion Papers 92-21, Department of Economics, University of Birmingham.
  • Handle: RePEc:bir:birmec:92-21

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    References listed on IDEAS

    1. Shorrocks, A F, 1980. "The Class of Additively Decomposable Inequality Measures," Econometrica, Econometric Society, vol. 48(3), pages 613-625, April.
    2. Donaldson, David & Weymark, John A., 1980. "A single-parameter generalization of the Gini indices of inequality," Journal of Economic Theory, Elsevier, vol. 22(1), pages 67-86, February.
    3. Thon, Dominique, 1982. "An axiomatization of the Gini coefficient," Mathematical Social Sciences, Elsevier, vol. 2(2), pages 131-143, March.
    4. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-231, March.
    5. Weymark, John A., 1981. "Generalized gini inequality indices," Mathematical Social Sciences, Elsevier, vol. 1(4), pages 409-430, August.
    6. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
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    More about this item


    trade policy ; economic models;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration


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