Of Openness and Distance: Trade Developments in the Commonwealth of Independent States, 1993-2002

Globalization and Economic Diversification

“…7 Given the description of the trade performance and reforms during the period under investigation discussed above, it may be hypothesized that the variation in degrees of trade openness is related to economic size (as measured by output and population of the trading countries), transportation costs and the exchange rate and trade policies of the trading countries. In addition to the standard gravity model specifications applied in other studies of trade openness of the economies in transition, such as those by Havrylyshyn and Al-Atrash (1998), Elborgh-Woytek (2003) and Babetski and others (2003), this study suggests controlling for a number of other CIS-specific factors. The following log-linear specification of the gravity model has been applied to identify the determinants of trade openness: where TO i is trade openness of i country to the EU and China respectively, Y i is GDP per capita in PPP of country i; P i is population of country i; D i is distance between country i's capital city and Frankfurt or Beijing, as proxies of the vicinity to EU or Chinese markets respectively; TI i is trade liberalization index, as measured by the EBRD index of exchange and trade liberalization; SI j is similarity index between country i and its trading partners; DM im is a set of m binary dummy variables, which take the value of one if there are common borders of country i with the EU and China respectively or if country i is a member of a free trade area or WTO, and zero otherwise; t is subscript referring to time; and e it is a standard error term.…”

“…Trade linkages of the economies in the CIS with the rest of the world have strengthened at a much weaker pace, though some more progress has been observed alongside the rapid recovery from the protracted transitional recession that had characterized the second half of the 1990s. While the economic literature on trade patterns in the CIS highlights the geographical reorientation of trade away from intraregional trade (Havrylishyn and Al-Altrash, 1998;Djankov and Freund, 2002), there are few empirical studies that have tried to identify what determines the changes in these patterns (Elborgh-Woytek, 2003 andBabetskii and. Most available studies apply the gravity approach to study trade patterns.…”

Is Russia Still Driving Regional Economic Growth?

“…Berengaut and others (2002) consider various possible explanations for the pickup in Ukraine's economic growth following several years of decline, such as increased utilization of the capital stock inherited from the Soviet period. Elborgh-Woytek (2003) documents the shift in trade by the CIS countries away from intra-CIS trade and toward the rest of the world, including notably the EU, and compares actual with potential trade.…”

Russia and the WTO: The "Gravity" of Outsider Status

“…In the end, Russia's exports still remained geographically diversified, at least compared to the CIS countries. Thus, the share of Russia's three main export markets in total exports was 23 percent in 1995, compared with between half and two-thirds for other CIS countries (see Elborgh-Woytek (2003)). In 2001, this figure stood at 22 percent for Russia, compared with a 31-65 percent range for other CIS countries.…”