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17 May 2013

Regional Trade and Economic Growth in the CIS Region

This paper examines recent economic and trade developments in 11 countries of the Commonwealth of Independent States (CIS) and includes an empirical analysis of growth determinants in the region. In contrast to the standard growth literature, the paper brings different trade flows into the analysis and attempts to examine their effect on economic growth.
Trade is divided into extra-regional and intra-regional trade without the Russian Federation (RF) and trade with the RF. A generalised method of moments panel data estimation methodology is employed to examine the determinants of growth. Key findings of the paper include: 1) Trade with the RF has a positive effect, although only moderate, on economic growth in the countries; intensification of trade with the RF by 1% adds, on average, 0.07% to the rate of growth; 2) Neither intra-regional trade without the RF nor extra-regional trade has a statistically significant impact on growth; 3) Investment, oil exports and economic freedom have a positive effect on economic growth. Higher government consumption is found to affect growth negatively.

 

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