ABSTRACT
n the Soviet model of a planned economy, essentially the sole function of foreign trade was to fill in the gaps in supplies on the domestic front. Soviet foreign trade comprised barely 4 percent of the national product in 1972, although the Soviet Union had considerably expanded its trade with the other Council for Mutual Economic Assistance (CMEA) countries. The different forms of ownership over the means of production and the restricted function of foreign trade in the planned economies would not be sufficient in themselves to sever the CMEA market from the world market. The unilaterally set ratios of CMEA currencies to foreign currencies can be construed as exchange rates in the Western sense only within a very limited scope. As in a market economy, in a planned economy the foreign exchange receipts from export transactions are converted into domestic currency by the central banks, which also supply the necessary foreign currency for imports in exchange for domestic currency.
