Solving Foreign Trade Puzzles in Post-Communist Transition

This article deals with the foreign trade of East-Central European countries in post-communist transition. It is primarily concerned with explaining certain early transition developments, unexpected and often neglected by policy makers and experts alike. The contribution of foreign trade to the generally unexpected steep output fall registered by each of these countries is discussed, stressing the inevitability of the disappearance of distorted demand patterns with the fall of communism and explaining why distorted demand was bound to affect not only the level of domestic output but also imports associated with the distorted demand. Exports to other former CMEA countries therefore fell precipitously. Other issues analysed in the article concern causes and beneficial effects of the rapid Westward reorientation of foreign trade, as well as the disappearance of another legacy of the communist past, East-Central European Countries', that is dual export structure.