ABSTRACT
Chapter 8 discusses how the transformation of the economic system has changed trade activities in the former socialist bloc that were once supported by two systems: the state monopoly over trade and the Council for Mutual Economic Assistance (COMECON). We examine this issue by using meta-analysis to synthesize the empirical results from earlier studies that investigated the determinants of trade volume. Several findings were obtained from the meta-analysis of the verification results published by the previous studies. First, in line with a theoretical hypothesis, both the distance between two trading companies and the gross domestic product (GDP) as a surrogate for economic scale, which were assumed to be the basic determinants of trade volume in the gravity model, had statistically significant impacts on trade volume, even in transition economies. Second, the hypothesis that the transformation factor (or the structural change variable) works in the direction of increasing the trade volume (in other words, the trade volume increases as transformation progresses) was proved. However, the analysis failed to capture the true effect of the factors expressed as the “structural reform variable” and the “EU factor variable.”
