Trade Integration of Eastern Europe and the Former Soviet Union into the World Economy: A Structuralist Approach
There is no doubt that trade liberalization and greater export orientation are a necessity in the transformation process of Eastern Europe and the former Soviet Union, regions that have long relied on a highly protected pattern of industrial development. There is, however, considerable controversy on how to attain these two objectives. The core of the controversy is whether sustained outward-oriented growth together with the needed industrial restructuring is best achieved through rapid, across-the-board import liberalization and passive government policies or whether it requires selective trade and industrial policies to encourage a sustained increase in exports of manufactures and to diversify the export structures. Two contrasting approaches dominate the debate. In the first view--the "neoliberal" or "radical" perspective--only wholesale trade liberalization and currency convertibility can provide a rational set of market incentives, since they are considered catalysts for strong growth rates of output and exports. The alternative approach--a "structuralist" or "gradualist" perspective--stresses the importance of incentive selectivity, dynamic technical efficiency, and government guidance, pointing out that they are more likely to determine industrial restructuring and sustained outward-oriented growth than an allocation of resources driven entirely by the market.
In the following, we will address this controversial issue that is becoming more and more important for the East European economies and the former Soviet Union. Their growing integration into the European and the international econ