Foreign Economic Liberalization in Eastern Europe

  • Paul J. J. Welfens


Traditionally, socialist economies in the CMEA were isolated from Western world markets. State foreign trade organizations handled the bilaterally fixed intra-CMEA trade and were responsible for trade with capitalist countries which was frequently conducted via barter trade agreements. Production was based on monopolistic intra-CMEA specialization which was further distorted by political considerations dominated by Soviet interests. This did not rule out that the USSR implicitly subsidized the smaller CMEA countries via natural resource exports that were underpriced relative to the world market. Divergences between export prices within the CMEA and domestic prices were characteristic for all CMEA countries. With inconvertible currencies, sustaining shortages in the official economy and a thriving shadow economy, black market exchange rates were well above official exchange rates, and currency substitution plagued most CMEA countries.


Foreign Direct Investment Foreign Investor Real Exchange Rate Real Interest Rate Trade Liberalization 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. AMPOFO-TUFFUOR, E. et. al. (1991), The Nature, Significance, and Cost of Rent Seeking in Ghana, Kyklos, Vol. 44, 537–559.Google Scholar
  2. BALASSA, B. (1978), Exports and Economic Growth: Further Evidence, Journal of Development Economics, 181–189.Google Scholar
  3. BHAGWATI, J.N. (1982), Shifting Comparative Advantage, Protectionist Demands and Policy Response, in: BHAGWATI, J.N., ed., Import Competition and Response, Chicago: University of Chicago Press.Google Scholar
  4. BHAGWATI, J.N. (1988), Protectionism, Cambridge: MIT Press.Google Scholar
  5. BIS (Bank of Internatioal Settlements, 1991), 61st Annual Report, Basel.Google Scholar
  6. BRABANT, J, M. van (1990), Remaking Eastern Europe — On the Political Economy of Transition, Boston: Kluwer.CrossRefGoogle Scholar
  7. BRUNO, M. (1988), Opening Up: Liberalization with Stabilization, in: Dornbusch, Rüdiger and F. Leslie C.H. Helmers, eds., The Open Economy Tools for Policymakers in Developing Countries, New York: Oxford University Press/The World Bank, 223–248.Google Scholar
  8. CHAPONNIERE, J.R. (1992), The Newly Industrialising Economics of Asia, STI Review, No. 9, 65–131.Google Scholar
  9. CD. T. and KRUGER, T. (1990), Wage Determination, the Natural Rate of Unemployment, and Potential Output, in: LIPSCHITZ, L. and McDONALD, D., German Unification. Economic Issues, Occasional Paper No. 75, Washington, D.C., 115–129.Google Scholar
  10. COLLINS, S.M. and RODRICK, D. (1991), Eastern Europe and the Soviet Union in the World Economy, Washington D.C.: Institute for International Economics.Google Scholar
  11. CORDEN, W. M. (1987), Protection and Liberalization: A Review of Analytical Issues, IMF Occasional Paper No. 54, Washington, DC.Google Scholar
  12. CSABA, L. (1990), Eastern Europe in the World Economy, Cambridge: Cambridge University Press.Google Scholar
  13. DINOPOULOS, E. and LANE, T.D. (1991), Market Liberalization Policies in a Reforming Socialist Economy, IMF working paper, WP 91/119, Washington DC.Google Scholar
  14. DRABEK, Z. (1985), Foreign Trade Performance and Policy, in: KASER, M.C. and RADICE, E.A., eds., Economic Structure and Performance between the two Wars, Vol. 1 of the Economic History of Eastern Europe 1919-75, Oxford: Oxford University Press.Google Scholar
  15. EDWARDS, S. (1989a), On the Sequencing of Structural Reforms, NBER Working Paper No. 3138, Cambridge, MA.Google Scholar
  16. EDWARDS, S. (1989b), Tariffs, Capital Controls, and Equilibrium Real Exchange Rates, Canadian Journal of Economics, Vol. 22, 79–92.CrossRefGoogle Scholar
  17. EDWARDS, S. (1990), Stabilization and Liberalization Policies in Eastern Europe: Lessons from Latin America, paper presented at the American Economic Association Annual Meetings, Washington, DC, Dec. 27-30, 1990.Google Scholar
  18. EDWARDS, S. and WIJNBERGEN, S. VAN (1986), The Welfare Effects of Trade and Capital Market Liberalization, International Economic Review, Vol. 27, 141–148.CrossRefGoogle Scholar
  19. GATT (1990), International Trade 1989-90, Geneva.Google Scholar
  20. GREENE, J. and ISARD, P. (1991), Currency Convertibility and the Transformation of Centrally Planned Economics, IMF Occasional Paper No. 81, Washington D.C.Google Scholar
  21. GRENBERG, G.M. and HELPMAN, E. (1990),Trade, Innovation and Growth, American Economic Review, P&P, Vol. 80, 86–91.Google Scholar
  22. GROUP OF THIRTY (1989), Foreign Direct Investment, 1973-87, New York.Google Scholar
  23. HARE, P. und HUGHES, G. (1991), Competitiveness and Industrial Restructuring in Czechoslovakia, Hungary and Poland, London: CEPR Discussion Paper No. 543.Google Scholar
  24. HAVRYLYSHYN, O. and TARR, D. (1991), Trade Liberalization, in: MARER, P. and ZECCHINI, S., eds., The Transition to a Market Economy, Vols. 1/2, Paris.Google Scholar
  25. HESTON, A. and SUMMERS, R. (1988), A New Set of International Comparisons of Real Product and Price Level: Estimates for 130 Countries, Review of Income and Wealth, Vol. 34, 1–25.CrossRefGoogle Scholar
  26. IMF (1990), Directions of Trade Statistics, Yearbook 1990.Google Scholar
  27. INOTAI, A. (1991), Liberalization and Foreign Direct Investment, in: KÖVES, A. and MARER, P., eds., Foreign Economic Liberalization, 99–112.Google Scholar
  28. KENEN, P.B. (1991), Transitional Arrangements for Trade and Payments Among the CMEA Countries, IMF Staff Papers, Vol. 38, 235–267.Google Scholar
  29. KLEIN, M. und WELFENS, P.J.J., eds., Multinationals in the New Europe and Global Trade, Heidelberg: Springer.Google Scholar
  30. KOSTRZEWA, W. and SCHMIEDING, H. (1989), The EFTA Option for Eastern Europe: Towards an Economic Reunification of the Divided Continent, Institute fuer Weltwirtschaft, Kiel Working Papers, 297, October 1989.Google Scholar
  31. KÖVES, A. and MARER, P., eds. (1991), Foreign Economic Liberalization, Boulder, Co.: Westview.Google Scholar
  32. KRAVIS, I. and LIPSEY, R. (1988), National Price Levels and the Prices of Tradables and Nontradables, American Economic Review, P&P, Vol. 78, 474–478.Google Scholar
  33. KRUEGER, A.O. (1990), Asian Trade and Growth Lessons, American Economic Review, P&P, Vol. 80, 108–112.Google Scholar
  34. LINDERT, P. H. (1986), International Economics, 8th ed., Homewood, 111.: Irwin.Google Scholar
  35. LITTLE, A; SCITCOVSKY, T. and SCOTT, M. (1970), Industry and Trade in Some Developing Countries, London: Oxford University Press.Google Scholar
  36. LUCAS, R. E., Jr. (1990), Why Doesn’t Capital Flow from Rich to Poor Countries, American Economic Review, P&P, Vol. 80, 92–96.Google Scholar
  37. McKINNON, R. (1991), Liberalizing Foreign Trade in a Socialist Economy: The Problem of Negative Value Added, in: WILLIAMSON, J., ed. (1991), 96–115.Google Scholar
  38. MOHAMMAD, S. and WHALLEY, J. (1984), Rent Seeking in India: Its Cost and Policy Significance, Kyklos, Vol. 37, 387–413.Google Scholar
  39. MURRELL, P. (1990), The Nature of Socialist Economics, Princeton: Princeton University Press.Google Scholar
  40. MURRELL, P. (1991), Evolution in Economics and in the Economic Reform of the Centrally Planned Economics, Universty of Maryland, mimeo, May 1991.Google Scholar
  41. OECD (1991a), Financial Market Trends, No. 48, Paris.Google Scholar
  42. OECD (1991b), Services in Central and Eastern European Countries, Paris.Google Scholar
  43. OECD (1992), Reforming the Economics of Central and Eastern Europe, Paris 1992.Google Scholar
  44. PAPAGEORGIOU, D., CHOSKI, A.M. und MICHAELY, M. (1990), Liberalizing Foreign Trade in Developing Countries, Washington, D.C.: The World Bank.Google Scholar
  45. PINDYCK, R.S. (1991), Irreversibility, Uncertainty, and Investment, Journal of Economic Literature, Vol. 29, 1110–1148.Google Scholar
  46. POZNANSKI, K. (1987), Technology, Competition and the Soviet Bloc in the World Market, Berkeley: Institute of International Studies.Google Scholar
  47. RIEBER, W.J. and ISLAM, I. (1991), Trade Liberalization in Asian Newly Industrialized Countries, The International Trade Journal, vol. V, 471–490.CrossRefGoogle Scholar
  48. RIEDEL, J. (1990), The State of Debate on Trade and Industrialization in Developing Countries, in: Pearson, C. and Riedel, J., eds., The Direction of Trade Policy, London: Basil Blackwell, 130–149.Google Scholar
  49. RIEDEL, J. (1990), The State of Debate on Trade and Industrialization in Developing Countries, in Pearson, Charles and Riedel, James, eds., The Direction of Trade Policy, London: Basil Blackwell, 130–149.Google Scholar
  50. ROMER, P. (1990), Are Nonconvexities Important for Understanding Growth?, American Economic Review, P&P, Vol. 80, 1110–1148.Google Scholar
  51. ROSATI, D. K. (1991), Institutional and Policy Framework for Foreign Economic Liberalization, in: UN COMMISSION FOR EUROPE (1991b), Economic Survey for Europe 1990-1991, New York, 21–31.Google Scholar
  52. SCHRENK, M. (1990), The CMEA System of Trade and Payments: Today and Tomorrow, SPR Discussion Paper No. 5, January 1990.Google Scholar
  53. SELL, F.L. (1988), “True Exposure”: The Analysis of Trade Liberalization in a General Equilibrium Framework, Weltwirtschaftliches Archiv, Vol. 124, 635–652.Google Scholar
  54. SELL, F.L. (1989), Die Rolle ökonomischer Verhaltensweisen für “Timing” und “Sequencing” handelspolitischer Liberalisierungsprogramme, Zeitschrift für Wirtschafts-und Sozialwissenschaften, Vol. 109, 449–466.Google Scholar
  55. SELL, F.L. (1990), “True Financial Opening Up”: The Analysis of Capital Account Liberalization in a General Equilibrium Framework, Universität Giessen, Discussion Papers in Development Economics, No. 9, mimeo.Google Scholar
  56. SENGUPTA, J.K. (1991), Rapid Growth in the NICs in Asia: Test of the New Growth Theory for Korea, Kyklos, Vol. 44, 561–580.Google Scholar
  57. STEHN, J. and SCHMIEDING, H. (1990), Spezialisierungsmuster und Wettbewerbsfähigkeit: Eine Bestandsaufnahme des DDR-Außenhandels, Die Weltwirtschaft, H. 1.Google Scholar
  58. TIROLE, J. (1988), The Theory of Industrial Organization, Cambridge, Ma.: MIT Press.Google Scholar
  59. UNCTC (1988), Transnational Corporations in World Development, New York 1988.Google Scholar
  60. VAN BERGEIJK, P.A.G. and OLDERSMA, H. (1990), Détente, Market-oriented Reform and German Unification: Potential Consequences for the World Trade System, Kyklos, Vol. 43, 599–610.Google Scholar
  61. WELFENS, P.J.J. (1988), The Economics of Military and Peacekeeping, Jahrbuch för Sozialwissenschaft, Vol. 40, 358–385.Google Scholar
  62. WELFENS, P.J.J. (1990a), Internationalisierung von Wirtschaft und Wirtschaftspolitik/Internationalization of the Economy and Economic Policies, Heidelberg: Springer.CrossRefGoogle Scholar
  63. WELFENS, P.J.J. (1990b), Economic Reforms in Eastern Europe: Problems, Options and Opportunities, paper prepared for testimony before U.S. Senate, Small Business Committee, March 23, 1990, revised draft in: INTERECONOMICS, 1991/5.Google Scholar
  64. WELFENS, P.JJ. (1991), EC Integration and Economic Reforms in CMEA Countries: A United Germany as a Bridge Between East and West?, in: Welfens, Paul J.J., ed., Economic Aspects of German Unification, Heidelberg und New York: Springer 1992, 9–42.Google Scholar
  65. WILLIAMSON, J., ed. (1991), Currency Convertibility in Eastern Europe, Washington, D.C.: Institute for International Economics.Google Scholar
  66. WOLF, T.A. (1988), Foreign Trade in the Centrally Planned Economy, New York: Harwood.Google Scholar
  67. WORLD BANK (1990a), Poland: Economic Management for a New Era, Washington, D.C.Google Scholar
  68. WORLD BANK (1990b), World Development Report 1990, New York.Google Scholar
  69. WORLD BANK (1991), Free Trade Agreements with the US: What’s in it for Latin America?, Washington D.C.Google Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 1992

Authors and Affiliations

  • Paul J. J. Welfens
    • 1
  1. 1.Department of EconomicsUniversity of MünsterMünsterGermany

Personalised recommendations