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Central Asian Trade Relations in the Post-Soviet Era

Author

Listed:
  • Arman Mazhikeyev

    (School of Business and Economics, Loughborough University, UK)

  • T.Huw Edwards

    (School of Business and Economics, Loughborough University, UK)

Abstract
By looking at post colonial trade relationships of the world countries for period of 1948-2006, Head and Mayer (HM [Head et al. (2010)]) conclude that a country's trade with the colonizer, typically, erodes by 60% after 30 years of independence. However, the CAR (Central Asian Republics(CAR) arehave been independent from itstheir colonizer, Russia for over 22 years, but their trade since 1995 has been is steady and increasing. As a highly-specific application of Head and Mayer's (HM[Head et al. (2010)]) study of post-colonial ties, CAR-Russia trade may appear to contradict the predictions or imply that there are interesting factors at work. We aimed to investigate what is explaining CAR-Russia trade based onn the CAR's' bilateral trade forin the Post-Soviet period under a gravity framework according to in terms of a combination of monadic (country-specific) effects, such as national GDP, and dyadic (bilateral) effects associated with relative trade costs. We find that (1) dyadic time-varying “RTA” and time-invariant “Landlockedness”, and monadic “importer's GDP” are highly significant in trade with the Central Asian Republics while “Tariffs” have low importance; (2) the CAR-Russia pair unobservable trade costs that are sensitive to global shocks had increased by 20%, their trade continued to be steady and increasing which is due to monadic effects (i.e., GDP growth, following the recovery in wWorld oil prices increase); (3) dynamics analysis of 185 country pairs trade show that 3/4 cases of observed changes in country pair trade is explained by country-specific features and 1/4 cases by bilateral trade relationships. Additionally, we find that country pair trade of the less liberal CARs (Uzbekistan and Turkmenistan) forwas 96% driven byexplained by a monadic effect, while for the more liberal CARs (Kyrgyzstan and Kazakhstan), trade for 50% is influenced by a dyadic effect.

Suggested Citation

  • Arman Mazhikeyev & T.Huw Edwards, 2013. "Central Asian Trade Relations in the Post-Soviet Era," Discussion Paper Series 2013_02, Department of Economics, Loughborough University, revised Jun 2013.
    • Handle: RePEc:lbo:lbowps:2013_02
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    File URL: http://www.lboro.ac.uk/departments/sbe/RePEc/lbo/lbowps/Mazhikeyev_WP2013_02.pdf
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    References listed on IDEAS

    as
    1. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 691-751, September.
    2. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    3. Leamer, Edward E. & Levinsohn, James, 1995. "International trade theory: The evidence," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 26, pages 1339-1394, Elsevier.
    4. Jean-Pierre Chauffour & Jean-Christophe Maur, 2011. "Preferential Trade Agreement Policies for Development : A Handbook," World Bank Publications - Books, The World Bank Group, number 2329.
    5. Head, Keith & Mayer, Thierry & Ries, John, 2010. "The erosion of colonial trade linkages after independence," Journal of International Economics, Elsevier, vol. 81(1), pages 1-14, May.
    6. Chen, Natalie & Novy, Dennis, 2012. "On the measurement of trade costs: direct vs. indirect approaches to quantifying standards and technical regulations," World Trade Review, Cambridge University Press, vol. 11(3), pages 401-414, July.
    7. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-850, September.
    8. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
    9. repec:fth:michin:368 is not listed on IDEAS
    10. Gaël Raballand, 2003. "Determinants of the Negative Impact of Being Landlocked on Trade: An Empirical Investigation Through the Central Asian Case," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 45(4), pages 520-536, December.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Petr Polak & Nikol Polakova & Anna Tlusta, 2020. "How Bad Are Trade Wars? Evidence from Tariffs," Working Papers 2020/15, Czech National Bank.

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    More about this item

    Keywords

    Trade costs; Gravity; Transition; Trade Crisis;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F54 - International Economics - - International Relations, National Security, and International Political Economy - - - Colonialism; Imperialism; Postcolonialism
    • P33 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid

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