Post-Soviet Globalization

Globalization is not a new phenomenon, but already occurred centuries ago. The first half of the 20th century seems an interruption of the move towards free trade. After World War II, however, the move to free trade resumed and gave rise to a sustained period of high economic growth in most parts of the world. Central and Eastern Europe was an exception because this region formed an almost closed trading bloc. Though CIS countries are still to a large extent dependent on Russia liberalization of external trade in the early 1990s led to a reallocation of trade flows away from Central and Eastern Europe towards the European Union. The Central Planning Bureau (1999) has explored possible future developments by applying a general equilibrium model for the world economy. It has identified four scenarios: 1. The Schumpeterian World, a scenario that is optimistic on economic progress and developing regions emphasizing globalization tendencies and market-oriented policies in the world economy. 2. The Malthusian scenario, which assumes that developing regions are unable to pursue market- and outward-oriented policies. 3. The Developing scenario assuming bleak growth perspectives for the OECD area, but high growth in non-OECD countries at high environmental costs. 4. The Ecological scenario, in which producers and consumers value environmental quality and put less emphasis on economic growth. Because of the differences in underlying assumptions the scenarios produce different outcomes. The results are not predictions, but descriptions of possible future developments on the basis of an applied general equilibrium model of the world economy and various exogenous trends that have been assumed. There seems considerable scope for CIS countries to integrate in the world economy. Continued globalization may further economic growth, while high economic growth harms the environment. However, energy-saving technologies and environmental legislation may affect the outcomes