ABSTRACT
This chapter examines the evidence on the political and economic determinants of the integration in the former bloc. From this evidence the trade integration emerges as having fulfilled a useful economic function for its members in the past, namely, the provision of a regime for the conduct of foreign trade. Mendershausen interpreted the findings as evidence that the Soviet Union was able to exploit its Eastern European partners by virtue of its large size and the monopoly and monopsony power derived there-from. However, in intra-bloc trade the Soviet Union was by far the largest, if not the only, net exporter of fuels and raw materials and net importer of manufactured goods. Franklyn Holzman, argues that Soviet subsidies were a form of compensation to Eastern Europe for the welfare losses these countries were made to bear by being forced to trade too much within the bloc.
