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New World Bank Report on Regional Trade Blocks

  • Ivana Kuhar

A new report by the World Bank says most post-communist European countries are now better integrated into the world economy than at any time since the Russian revolution. But the new study also finds that two new -- and starkly uneven -- regional trade blocks are emerging among those nations. VOA's Ivana Kuhar produced this report, which is narrated by George Dwyer.

A new World Bank report shows that, since 1995, trade in Eastern Europe's post-communist transitional economies, including the former Soviet Union, has grown at a faster pace than any other region in the world. Exports there have tripled, while imports have increased two and a half times. But the nature and pace of economic reintegration among the 27 countries of the region is sharply split, says the report's author, Harry Broadman.

"The study suggests that there is an emerging two trade blocks in the region: a richer, Euro-centric block that trades increasingly with the wealthier countries of the world (particularly with the EU 15 or Western Europe), and a poorer, Russia-centric block" said Mr. Broadman.

The "Euro-centric" block consists of eight new members of the European Union: Turkey, and the seven Southeastern European countries. The "Russia-centric" block includes members of the 12-nation Commonwealth of Independent States -- former Soviet republics. The study finds that open trade is a potent driver of development in the region, and that countries that have liberalized their trade and reformed their economic sectors, Poland and Hungary for example, enjoy the highest rate of economic growth and prosperity.

At the other end of the spectrum are countries such as Belarus and Uzbekistan whose economies are less successful, it is believed, for having remained relatively closed to competition. The report says countries on a successful reform track, most notably Croatia, have enhanced their credentials for membership in the European Union by reorganizing their economies.

Countries that have lagged need to reorient their trade policies. Russia, says the report, could improve its position by joining the World Trade Organization.

Mr. Broadman suggests, "It also needs to engage in a series of structural reforms behind the border such as creating a more hospitable domestic environment both for Russians to invest in their economy, for foreign investors to invest in their economy, and also to allow for greater trade among Russia's regions."

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