Opening Up and Geographic Diversification of Trade in Transition Economies
IMF Working Papers, February 1, 1998
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- Opening Up and Geographic Diversification of Trade in Transition Economies
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Bibliographic details
- Authors: Oleh Havrylyshyn, Hassan Al-Atrash
- Published: February 1, 1998
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451921267.001
Summary
- Paper examines progress in transition and geographic diversification of trade for a sample of countries in transition.
- Focuses on two issues: the degree of trade openness and trade integration.
- Concludes that about half of the group of countries sampled are becoming as open as similar market economies, but that many others remain relatively closed.
- Finds that geographic diversification (to the European Union) is greater the closer is geographic proximity and the more advanced the country is with reforms.
- Extends the analysis, in an illustrative way, to show how much larger would be the share of exports to the EU if structural reforms were more ambitious.
Key findings
- About half of sampled transition countries have reached openness levels comparable to similar market economies.
- A substantial subset of transition countries remains relatively closed.
- Geographic diversification toward the European Union is positively associated with:
- Closer geographic proximity to the EU.
- Greater advancement in structural reforms.
- Illustrative extended analysis suggests a larger share of exports to the EU could be realized under more ambitious structural reform scenarios.
Analytical approach and topics covered
- Econometric analysis using gravity models and measures of market penetration.
- Topics and indicators discussed:
- Trade openness and trade integration.
- Exports and export-import patterns.
- Exchange rates and Real effective exchange rates.
- Trade balance and foreign exchange considerations.
- Role of structural reforms in increasing EU export shares.
Policy implications and recommendations (implicit from analysis)
- Advancing structural reforms can increase the share of exports to the European Union for transition economies.
- Policies that reduce barriers to trade and enhance market integration are important for geographic diversification.
- Proximity-related advantages suggest regionally targeted integration and cooperation may accelerate diversification toward the EU.
Content in this bundle
- Opening Up and Geographic Diversification of Trade in Transition Economies - WP/98/22