The Background to Eastward Enlargement
The collapse of communism in central and south-eastern Europe and the dissolution of the Soviet Union in December 1991 resulted in the breakup of the one of the largest trade preference zones in the world. The zone extended over a fifth of the world’s land surface and embraced a population of 400 million people who were composed of more than 100 nationalities. In 1989 the configuration of this zone, which was known as the Council for Mutual Economic Assistance (CMEA), or more popularly as Comecon, was relatively simple. The CMEA was dominated, economically and politically, by the Soviet Union, which itself consisted of fifteen nominally independent republics, of whom the Russian Republic was by far the most important in terms of population and resources. The other members included the five central and southeast European states which fell under Soviet hegemony after the second world war but who retained their own separate national institutions and identities — Bulgaria, Czechoslovakia, Hungary, Poland and Romania plus the German Democratic Republic which consisted of the eastern Lander of Germany which were reconstituted into a separate independent republic after falling under Soviet occupation. Three other non-European states, Cuba, Mongolia and Vietnam were also full members of CMEA and two other European socialist republics, Albania and Yugoslavia, were associate members of the CMEA but played only a minor role in its activities.
KeywordsTransition Economy Trade Flow Purchase Power Parity Capital Inflow Current Account Deficit
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