Introduction

In market economies, regional economic integration is achieved through the selective elimination of barriers against the movement of goods, services and factors of production among the integrating countries. Since private agents undertake the acts that are the subject of integration measures, the causes of integration are transparent and their economic consequences are subject to ready analysis and measurement. Among centrally planned economies (CPEs), such visible incentives to integration were irrelevant because foreign trade was a monopoly of the state, and the state's preferences toward trade with specific partners were implemented by means of administrative measures that were invisible to outsiders. This lack of transparency in the measures for integration among the members of the Council for Mutual Economic Assistance (CMEA) led to considerable confusion and controversy about sources, means and consequences of economic integration among these countries. Thus, now, as these countries face the task of reconsidering economic ties among themselves, and in the case of the former USSR within themselves, the question of which of these past flows of goods and resources ought to be retained and which should be eliminated, as well as the means of doing so, looms large on the agenda of the region's policymakers.

In this chapter, I examine the basis of CMEA integration and its effects on intra-regional trade in order to explain the legacy that it leaves for the region. Important aspects of this legacy include the volume and structure of past trade, as well as the economic benefits that it brought to the region.