Those of them which were part of the former Soviet economic sphere used to form a largely isolated trade bloc, with few interactions with the world economy. Today, these countries export and import more than two-thirds of their goods and services to and from the rest of the world. They also attract significant amounts of foreign investment.
Openness and international integration can lead to a dramatic improvement in economic performance through the introduction of new technologies and access to larger markets. The paper by Douglas Laxton and his co-authors provides interesting insights and helps to estimate some of the dynamics that are at work. At the same time, international integration places significant demands on a country’s economic, political and social institutions.