East European Economic Relations under Communism

Abstract

The foreign economic relations of the CEE-10 economies in the period between the end of the second world war and the collapse of communism were determined by the incorporation of the east European economies into the Soviet bloc and the adoption of the Soviet model of development. Following the communist takeover of power in eastern Europe in 1948 and the slide into cold war, the east European economies were forced to implement the Stalinist model of heavy industrialisation within their domestic economies. They were also required to redirect their external economic relations towards other socialist states and to the Soviet Union, in particular, and to minimise their contacts with, and dependence on, western market economies. This was accompanied by the adoption of the Soviet system of planning and its associated institutions which included a centralised state monopoly for the administration of foreign trade. This Chapter will examine the impact of these factors on East European trade relations in the communist era and the problems this has created for the redirection of trade flows to the industrialised market economies and the EU after the collapse of communism.