Integration of Eastern Europe Into the World Trading System

Abstract

Integrating the economies of Eastern Europe into the world trading structure involves the whole complex of structural adjustment policies. The problem is how to eliminate multiple pricing, direct subsidization and cross-subsidization, the absorption of resources by noneconomic activity, and the suppression of inflation and unemployment. Any policy reform package must be comprehensive, and economic accountability must be present at all levels. Reform must be accompanied by trade liberalization to help break down domestic monopolies and to gain the efficiencies from the division of labor across borders. Eastern Europe cannot look to intraregional trade to cushion the process of integration of its production structures into the world economy. This makes the durable acceleration of expansion of trade relations with the rest of the world even more pressing. The ability to increase exports in the face of large import-intensive investment requirements is crucial if external viability is not to be compromised by excessive levels of external debt. References.