Abstract
Traditionally, socialist economies in the CMEA were isolated from Western world markets. State foreign trade organizations handled the bilaterally fixed intra-CMEA trade and were responsible for trade with capitalist countries which was frequently conducted via barter trade agreements. Production was based on monopolistic intra-CMEA specialization which was further distorted by political considerations dominated by Soviet interests. This did not rule out that the USSR implicitly subsidized the smaller CMEA countries via natural resource exports that were underpriced relative to the world market. Divergences between export prices within the CMEA and domestic prices were characteristic for all CMEA countries. With inconvertible currencies, sustaining shortages in the official economy and a thriving shadow economy, black market exchange rates were well above official exchange rates, and currency substitution plagued most CMEA countries.
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