Foreign Trade in Eastern Europe's Transition: Early Results

59 Pages Posted: 27 Apr 2000 Last revised: 12 Aug 2010

See all articles by Dani Rodrik

Dani Rodrik

Harvard University - Harvard Kennedy School (HKS); Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Date Written: May 1992

Abstract

By the end of 1991, Czechoslovakia, Hungary and Poland have achieved a substantial degree of openness to foreign trade. In all three countries, trade is now de-monopolized and licensing and quotas playa 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. However, there is no evidence 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 1/2 percent of GDP in Poland and 7-8 percent 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, Foreign Trade in Eastern Europe's Transition: Early Results (May 1992). NBER Working Paper No. w4064. Available at SSRN: https://ssrn.com/abstract=226883

Dani Rodrik (Contact Author)

Harvard University - Harvard Kennedy School (HKS) ( email )

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HOME PAGE: http://www.ksg.harvard.edu/rodrik/

Centre for Economic Policy Research (CEPR)

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National Bureau of Economic Research (NBER)

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