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Trade Policies of the Former Centrally Planned Economies

  • Political Science


Since the end of Communist rule, the countries of Eastern Europe and the former Soviet Union have been forced to restructure their formerly centrally planned economies. Among the dilemmas they have faced is how open they should be to international trade. Using multiple regression, the openness of these economies to trade is empirically determined while controlling for the effects of both population and wealth. Residuals from the regression equations are then examined in order to identify how much more or less open to trade each country has been. Analysis of the residuals for six distinct regions of the former Communist world presents no definitive answers but does suggest some preliminary conclusions. A countrys degree of political openness is found to be most important in determining relative openness to trade; close behind that are its geographic proximity to important world markets and its prospects for future accession to the European Union.

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