Soviet Heritage and Export Trade - Cross-Country Evidence from Georgia, Russia and Ukraine.

The dissolution of the Soviet system in 1991 caused an economic collapse in all the successor states of the Union of Soviet Socialist Republics. The immediate consequence of the breakdown was the emergence of previously non-existent trade barriers. Further, economic and social instability spread and a huge proportion of the population in these countries sank into poverty. In the 1990s, most of the successors recorded a dramatic decline both in production and trade. Particularly the economies poor in resources still suffer the consequences of those events. It was not only the arbitrary distortion of trade relations, due to central planning, which required an adjustment of foreign trade relationships after 1991. To a greater degree, there was a country-specific reorientation in exports. However, for several decades, the integration in the economic space of the USSR has been essential for all these countries. Therefore, we expect that in recent years traditional economic relations are a major driving factor of foreign trade in the successor states. This paper deals with the impact of the traditional economic relations on the countries in the former Soviet Union. For that reason, an empirical analysis of foreign merchandise export trade is conducted for the period 1996-2009 and evidence for the importance of initial conditions is derived. The study focuses on Georgia, Russia and Ukraine as those countries efficaciously reflect and proxy the ambivalent economic development in the successor economies and present different paths of trade reorientation. [ABSTRACT FROM AUTHOR]

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