The effect of trade liberalization in South-Eastern European countries

The dissolution of the Council of Mutual Economic Assistance and the breakdown of the Socialist Federative Republic of Yugoslavia in 1991 have deeply affected trade flows of South-Eastern Europe countries. They have also created incentives and initiatives for a reshaping of trade patterns in the region. This study aims to evaluate the impact of the multilateral and regional integration process of SEE countries. Three complementary approaches are used. The first consists in evaluating the degree of their trade integration between 1994 and 2002, and determining their trade potential with their main partners, i.e. themselves and the EU. The second approach tries to evaluate the impact of trade liberalization on exports. We study the evolution tariffs barriers faced by SEE countries, between 1995 and 2000, and estimate their effects on manufactured trade. The third part investigates the impact of trade liberalization on firms performance. In particular, we are interested in what extent foreign trade and foreign direct investment contributed to improvements in firm performance over the period 1994-2002.