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Pressure to Adjust: Consequences for the OECD Countries from Reforms in Eastern Europe

  • Robert Holzmann

    (University of Saarland, University of Munich)

  • Christian Thimann

    (University of Saarland, University of Munich)

  • Angela Petz

    (University of Saarland, University of Munich)

The opening of formerly planned economies to the world has not only profound consequences for these Central and Eastern European economies. There are also substantial effects on the economies of Western Europe, resulting from enhanced price competition in product markets, migration and capital flows. The macroeconomic effects and adjustment requirements in the OECD countries are fundamentally determined by the two central but not mutually exclusive growth options for the reform countries, which are analysed in the paper: The option of an import-led growth in Eastern Europe, resulting from capital transfers from the West in order to assist the modernisation and investment process in the East, and the option of an export-led growth, allowing for the unrestricted entering of Western markets and imitating the experience of Asian economies. The estimated magnitudes and likely economic effects speak in favour of the export-led growth option, but under both options the governments in the West are challenged.

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Paper provided by EconWPA in its series International Trade with number 9403001.

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Length: 62 pages
Date of creation: 17 Mar 1994
Date of revision:
Handle: RePEc:wpa:wuwpit:9403001
Note: 62 pages, Binary Word-For-Windows file
Contact details of provider: Web page: http://econwpa.repec.org

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  1. Hamilton, C.B. & Winters, L.A., 1992. "Opening Up International Trade in Eastern Europe," Papers 511, Stockholm - International Economic Studies.
  2. Bergstrand, Jeffrey H, 1985. "The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 474-81, August.
  3. Aitken, Norman D, 1973. "The Effect of the EEC and EFTA on European Trade: A Temporal Cross-Section Analysis," American Economic Review, American Economic Association, vol. 63(5), pages 881-92, December.
  4. David T. Coe & Reza Moghadam, 1993. "Capital and Trade As Engines of Growth in France; An Application of Johansen's Cointegration Methodology," IMF Working Papers 93/11, International Monetary Fund.
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  7. Marin, Dalia, 1990. "Is the Export-Led Growth Hypothesis Valid for Industrialized Countries?," CEPR Discussion Papers 362, C.E.P.R. Discussion Papers.
  8. Anthony Boote, 1992. "Assessing Eastern Europe's Capital Needs," IMF Staff Papers, Palgrave Macmillan, vol. 39(4), pages 948-956, December.
  9. T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
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  11. Gros, D. & Steinherr, A., 1991. "Economic Reform in the Soviet Union: Pas de deux Between Disintegration and Macroeconomic Destabilization," Princeton Studies in International Economics 71, International Economics Section, Departement of Economics Princeton University,.
  12. Barro, Robert J & Sala-i-Martin, Xavier, 1992. "Convergence," Journal of Political Economy, University of Chicago Press, vol. 100(2), pages 223-51, April.
  13. Biessen, Guido, 1991. "Is the impact of central planning on the level of foreign trade really negative?," Journal of Comparative Economics, Elsevier, vol. 15(1), pages 22-44, March.
  14. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
  15. van Bergeijk, Peter A G & Oldersma, Harry, 1990. "Detente, Market-Oriented Reform and German Unification: Potential Consequences for the World Trade System," Kyklos, Wiley Blackwell, vol. 43(4), pages 599-609.
  16. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 70(1), pages 65-94.
  17. Anthony R. Boote, 1992. "Assessing Eastern Europe's Capital Needs," IMF Working Papers 92/12, International Monetary Fund.
  18. Lapan, Harvey E, 1976. "International Trade, Factor Market Distortions, and the Optimal Dynamic Subsidy," American Economic Review, American Economic Association, vol. 66(3), pages 335-46, June.
  19. Bergstrand, Jeffrey H, 1989. "The Generalized Gravity Equation, Monopolistic Competition, and the Factor-Proportions Theory in International Trade," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 143-53, February.
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