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Foreign Trade in Eastern Europe's Transition: Early Results

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  • Rodrik, Dani

Abstract

By the end of 1991, Czechoslovakia, Hungary and Poland had achieved a substantial degree of openness to foreign trade. In all three countries, trade is now demonopolized and licensing and quotas play a very small role. Exchange controls have virtually disappeared for current-account transactions. Judging by partner statistics, export performance has been impressive in all three countries, and import booms are under way in at least Hungary and Poland as well. There is no evidence, however, that exporters have had any success in finding Western markets for the exports they have lost in Eastern markets. The collapse of the CMEA represents a significant shock, amounting to a loss of real income of 3% of GDP in Poland and 7-8% of GDP in Hungary and Czechoslovakia. Export performance is attributable to exchange-rate policy in part, but the collapse of domestic demand has possibly played an even more important role. Finally, trade liberalization so far appears to have had little effect on price discipline, in large part because of the substantial devaluations that have accompanied it.

Suggested Citation

  • Rodrik, Dani, 1992. "Foreign Trade in Eastern Europe's Transition: Early Results," CEPR Discussion Papers 676, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:676
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    References listed on IDEAS

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    1. Murphy, Kevin M. & Shleifer, Andrei, 1997. "Quality and trade," Journal of Development Economics, Elsevier, vol. 53(1), pages 1-15, June.
    2. Gabor Oblath & David Tarr, 2017. "The Terms-of-Trade Effects from the Elimination of State Trading in Soviet-Hungarian Trade," World Scientific Book Chapters, in: Trade Policies for Development and Transition, chapter 13, pages 295-313, World Scientific Publishing Co. Pte. Ltd..
    3. Peter B. Kenen, 1991. "Transitional Arrangements for Trade and Payments among the CMEA Countries," IMF Staff Papers, Palgrave Macmillan, vol. 38(2), pages 235-267, June.
    4. Wang, Zhen Kun & Winters, L. Alan, 1991. "The Trading Potential of Eastern Europe," CEPR Discussion Papers 610, C.E.P.R. Discussion Papers.
    5. Dani Rodrik, 1992. "Making Sense of the Soviet Trade Shock in Eastern Europe: A Framework and Some Estimates," NBER Working Papers 4112, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    Eastern Europe; Trade Policy;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • P33 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid

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