Friends with or without benefits? An empirical evaluation of bilateral trade and economic integration between some of the post-Soviet economies

Abstract

AbstractThe third decade of post-Soviet transition has seen a significant resurrection of economic integration centered around Russia. This paper analyzes bilateral trade of the Eurasian Economic Union (EUEA) members using gravity models with incomplete specialization in production and reviews the impact of newly signed preferential/free trade agreements across 2008–2019. The presented study relies on the explicit use of per worker physical capital endowments in determining cross-country trade and theory-consistent discrimination method between a variety of neoclassical and monopolistic models of trade. Our analysis highlights the importance of intra-industry trade in low processing sectors such as agri-food, mineral products, and metals between the block members. We find that the impact of new treaties has been primarily beneficial for imports, where the EUEA-Vietnam treaty had the most significant and persistent economic effect, while the EUEA membership has generated short-lived gains across different modes of trade for all members, except Kyrgyzstan.