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International Finance Discussion Papers
The International Finance Discussion Papers logo links to the International Finance Discussion Papers home page Disintegration
Simeon Djankov and Caroline L. Freund
1998-618  (August 1998)

Abstract:  We study the effects of trade barriers and the persistence of past linkages on trade flows in the former Soviet Union (FSU). Estimating gravity equations on 1987-1996 trade among and between nine Russian regions and fourteen FSU republics, we find that Russian regions traded 60 percent more with each other than with republics in the reform period (1994-96). In contrast, they did not trade significantly more with each other than with republics in the pre-reform period (1987-90). Estimating a richer model, we find that trade barriers are primarily responsible for the current domestic bias. However, the existing infrastructure stock has significantly limited the recent reorientation in trade. Finally, we find evidence of anticipatory adjustment during the transition to independence.

Full paper (328 KB PDF)

Keywords
Infrastructure, trade, adjustment costs

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