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Problems of Post-CMEA Trade and Payments

Author

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  • Rosati MEP, Dariusz

Abstract

The demise of the CMEA trading system in 1991 and the shift to convertible currency settlements and world market prices was expected to bring about a severe contraction of intra-group trade, coupled with large imbalances in trade between Eastern Europe and the former Soviet Union. The observed trade collapse in 1991 was exacerbated by deep domestic recession and political unrest in the region. To alleviate the costs of transition and to preserve existing trade links in Eastern Europe, the idea of a Central European Payments Union has been put forward, modelled on the successful archetype of the European Payments Union. But the present situation in Eastern Europe is different in many important respects from that of Western Europe in the late 1940s. Moreover, the observed trade decline is to a large extent a `natural' outcome of the elimination of the preferential and highly distortionary trading system of the CMEA. Therefore, the payments union does not seem to be the `first-best' solution. Instead, a comprehensive programme of external financial and technical assistance is needed to allow for the smooth restructuring of production and trade in post-CMEA countries, and to minimize losses from the abrupt cuts in mutual trade.

Suggested Citation

  • Rosati MEP, Dariusz, 1992. "Problems of Post-CMEA Trade and Payments," CEPR Discussion Papers 650, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:650
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    References listed on IDEAS

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    Citations

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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. Jože P. Damijan & Matija Rojec & Maja Ferjančič, 2011. "The Growing Export Performance of Transition Economies: EU Market Access versus Supply Capacity Factors," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 58(4), pages 489-509, December.
    3. Jože Damijan & Črt Kostevc & Matija Rojec, 2015. "Bright past, shady future? Past and potential future export performance of CEE countries in a comparative perspective," Post-Communist Economies, Taylor & Francis Journals, vol. 27(3), pages 306-335, September.
    4. Joze P. Damijan & Matija Rojec & Maja Ferjancic, 2008. "Growing export performance of transition economies: EU market access versus supply capacity factors," LICOS Discussion Papers 20208, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    5. Peter Egger, "undated". "Economic Integration in Trade and FDI. Dynamic Considerations of Potentials and Adjustment," WIFO Working Papers 130, WIFO.
    6. Françoise Lemoine & Claude Leroy, 1992. "Les échanges des pays d'Europe centre-orientale : l'écueil d'une double concurrence," Économie et Statistique, Programme National Persée, vol. 260(1), pages 37-48.
    7. Enrique Martínez-Galán & Maria-Paula Fontoura & Isabel Proença, 2005. "Trade Potential In An Enlarged European Union: A Recent Approach," International Trade 0508011, EconWPA.

    More about this item

    Keywords

    CMEA; Eastern Europe; Gravity Model; International Trade; Payments Union; Poland;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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