ABSTRACT
Certain domestic characteristics of the centrally planned economies (CPEs) affect their foreign trade behavior. There are three major consequences for foreign trade behavior. First, among the Eastern nations, foreign trade is conducted primarily to obtain essential imports. Exports are considered not as an end in themselves but as a means to finance the necessary imports. Second, the CPEs often take a barter-type approach to foreign trade and view exports and imports as interdependent. Third, because foreign trade is run by a state monopoly, tariffs are basically redundant; trade is controlled by implicit import and export quotas. The decisions to trade are made directly by the government, often without the mediation of price comparisons. Limitations are placed on convertibility when a currency is in excess supply on foreign exchange markets or, what amounts to the same, when other currencies or gold are in excess demand by the holders of the currency in question.
