IMF Working Paper Series
Выпуск N98/22 за 1998 год
Опубликовано на портале: 16-12-2003Oleh Havrylyshyn, Hassan M. Al-Atrash IMF Working Paper Series. 1998. No. 98/22.
During the Soviet period, trade of the economies of the region was highly inward-oriented; this was particularly marked for most of the republics of the USSR, but a bit less so for Russia. Independence and transition to the market should have resulted in two changes: increased external trade relative to GDP as the central planning restrictions on foreign trade were lifted; and strong reorientation of trade to the rest of the world to achieve a more normal geographic distribution as central plan directives were removed, with the extent and speed of such geographic diversification affected by the degree of structural reform achieved. The paper tests these hypotheses. For most countries in central Europe, as well as a few others, one observes a trade openness ratio similar to or at least approaching that of market economies of comparable size and level of development. Using a variant of the gravity model, the study also finds that geographic diversification to the European Union is greater the closer is geographic proximity and the more progress a country makes in structural reforms. The model is used to simulate the effects of more ambitious structural reforms. The results suggest that even for countries most advanced in reforms, one might still expect as much as an 8-10 percentage point increase in the level of exports to the European Union, and more for others. There are several important policy implications from these results. First, much remains to be done in terms of liberalization and structural reform in most transition economies, which will in turn promote further restructuring and resource reallocation and trade diversification. Second, greater access to European Union markets may give an added boost to reorientation of trade. Third, while the results suggest the importance of differentiating competitive exchange rates, the limited period of time precludes differentiating fully the effects of exchange rate stability from those of financial stability.