The Reorientation of Transition Countries’ Exports: Changes in Quantity, Quality and Variety

Abstract

The paper analyzes the factors behind the reorientation of transition countries’ exports to their non-traditional partners outside their former block. First, the amount of reorientation is calculated using a gravity model. Then, reasons for the cross-country differences in the rate of closing the gap between the actual and potential exports, such as increases in quantity, quality, and variety, are analyzed using a variety of measures from the literature. The results show that although exports have increased significantly, as of 1999 they are still far below the potential in CIS and to a lesser extent in CEEC. Change in quantity has been the primary reason behind the reorientation of CIS exports. However, it had smaller effect on CEEC reorientation, where increase in product variety has been important. Although some quality improvement is observed in both CEEC and CIS, it had small effect on the extent of reorientation.