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How changes in the former CMEA area may affect international trade in manufactures

Author

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  • Erzan, Refik
  • Holmes, Christopher
  • Safadi, Raed

Abstract

The authors give a long-term perspective on how changes in the former CMEA areas will affect international trade in manufactures. They show that expanding Eastern European exports to the West should be viewed as a step toward normalizing the Eastern European countries'trade patterns. First, proportionally less of the Eastern European economies'trade will be with each other, especially with the former Soviet Union. Second, Western Europe will be their major trading partner but their trade with (especially imports from) Japan and North America may increase dramatically (from a small base). Their exports to and imports from developing countries may also change dramatically. The volume of Eastern European trade is in line with the low income of these economies. In the long run manufactures trade will increase four- to sixfold, once Eastern European income levels catch up with industrial country levels. Until incomes in Eastern European and former Soviet economies increase significantly, labor-intensive goods are likely to dominate their exports to market economies, and sophisticated goods their imports. The authors contend that, since the end of the Cold War, the West has successfully improved the Eastern European countries'access to Western trade, and that the Eastern European countries should now enjoy equal or favorable treatment. Czechoslovakia, Hungary, and Poland, in particular, may become the most favored outsiders in the European Economic Space, the largest single market in the world. One short-term effect of the Eastern European countries'improved outlook may be that developing countries that rely on manufactures for export revenues may have tougher times in major Western markets. But the emancipation of Eastern European and former Soviet economies - and the pent-up demand for consumer goods likely from deprived populations - should provide important opportunities for the dynamic developing countries. The former Soviet Union was not a large market for developing countries - except for India and Yugoslavia and to a lesser extent Algeria and Egypt. Countries such as India that did supply the former Soviet Union with manufactures may soon have to seek alternative markets.

Suggested Citation

  • Erzan, Refik & Holmes, Christopher & Safadi, Raed, 1992. "How changes in the former CMEA area may affect international trade in manufactures," Policy Research Working Paper Series 973, The World Bank.
  • Handle: RePEc:wbk:wbrwps:973
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    References listed on IDEAS

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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. Kamwela, V.K. & van Bergeijk, P.A.G., 2020. "The border walls of (de)globalization," ISS Working Papers - General Series 123704, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    3. Braga, Carlos A. Primo*Safadi, Raed*Yeats, Alexa, 1994. "NAFTA's Implications for East Asian exports," Policy Research Working Paper Series 1351, The World Bank.
    4. Peter A. G. van Bergeijk, 2015. "Visible and invisible walls: World trade patterns and the end of the Cold War," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 65(2), pages 231-247, June.
    5. Ogunkola E. Olawale, 1998. "An empirical evaluation of trade potential in the economic community of West African States," Working Papers 84, African Economic Research Consortium, Research Department.
    6. Kaminski, Bartlomiej & DEC, 1994. "The significance of the"Europe agreements"for Central European industrial exports," Policy Research Working Paper Series 1314, The World Bank.
    7. Peter A.G. van Bergeijk, 2009. "Economic Diplomacy and the Geography of International Trade," Books, Edward Elgar Publishing, number 13518.

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