Opening Up and Geographic Diversification of Trade in Transition Economies

Abstract

This is a Working Paper and the author(s) would welcome any comments on the present text. Citations should refer to a Working Paper of the International Monetary Fund. The views expressed are those of the author(s) and do not necessarily represent those of the Fund.

EU Enlargement and Trade Integration: Lessons from a Gravity Model

“…Turning to the SEECs, Bulgaria and Romania experienced a strong rise in trade with the euro area between 1997 and 2003. The model suggests that trade links between Romania and the euro area are very strong already, thereby confirming the earlier results of Havrylyshyn and Al‐Atrash (1998). By contrast, Albania, Bosnia‐Herzegovina, Macedonia, and, to a lesser extent, Croatia still have significant leeway to intensify their trade with the euro area.…”

“…Some transition economies were found to be much closer to equilibrium (this is the case for Hungary, with a ratio of potential to actual trade of 1.8), while countries like Romania and Albania, which did not participate in the Council of the Mutual Economic Assistance, started trade liberalization with regional trade structures closer to the gravity predictions estimated by Baldwin. Havrylyshyn and Al‐Atrash (1998) found that Romania achieved a significantly higher actual share of trade with the EU than predicted by the model in 1996. Kaminski et al.…”

Landlockedness, Infrastructure And Trade : New Estimates For Central Asian Countries

“…The literature so far explains hysteresis in former Soviet Union trade by remoteness and landlockedness 2 (Kaminski, Wang and Winters, 1996;Djankov and Freund, 2002;Grafe, Raiser and Sakatsume, 2005), poor access to markets and incomplete reforms (Havrylishin and Al-Atrash, 1998), weak institutions (Babetskaia- Kukharchuk and Maurel, 2004), poor product quality (e.g. Bevan et al, 2001), and hysteresis in consumption, production and business networks (Djankov and Freund, 2002).…”

Does political disintegration lead to trade disintegration? Evidence from transition countries1

“…The institutional reforms may favour trade redeployment to outside partners. Thus, those ‘which have made the most progress in structural reforms have also gone farthest in diversifying their exports to new destinations’ (Havrylyshyn and Al‐Atrash, 1998). Actually, transition reforms took place faster in the former Czechoslovakia and played an obvious role in the decline of bilateral trade between the Czech Republic and Slovakia.…”