Trade Performance and Regional Integration of the CIS Countries

'Trade Performance and Regional Integration of the CIS Countries' is part of the World Bank Working Paper series. These papers are published to communicate the results of the Bank?s ongoing research and to stimulate public discussion.This paper provides a detailed quantitative analysis, based on standard econometric models, of the trends and the configurations of trade of the CIS countries, with an emphasis on its low-income members. It also contains an analysis of the CIS countries? trade potential and its realization in a comparative perspective, as well as examination of the nature of the existing CIS intra-bloc trade.The study reveals no evidence that the CIS countries as a group under-perform significantly in terms of either trade openness or export levels when compared to the countries of similar per capita GDP and population size. However, the low-income economies in the CIS (CIS-7) have been performing on average just marginally better than other low-income countries and, overall, they have been falling behind the countries that benefit most from globalization. Overall, progress in the trade area was slower in the CIS-7 countries than in the higher income CIS members. This is reflected in: (i) lower overall export level and slower export growth; (ii) higher trade deficit; (iii) lower share of manufacturing exports; (iv) incomplete reorientation of trade flows; and (v) lower incidence of intra-industry trade.This report found that the CIS free trade area is, on balance, a beneficial, trade-facilitating bloc. There is no evidence so far that the CIS integration is of the ?South-South? type (harmful for some of its members). However, the potential benefits of CIS trade integration remain badly underutilized. The paper suggests several directions for strengthening the legal and administrative framework for intra-CIS trade arrangements.