Monetary Integration of Eastern Europe Into the World Economy

Abstract

There is a widespread feeling in all Eastern European countries belonging to the Council for Mutual Economic Assistance (CMEA, Russian acronym Comecon) that an essential element of their market-oriented reforms has to be a closer integration into the world economy. For only then will the internal price structure of non-autarkic countries be right — i.e., permanently adapting to true scarcities. That, however, is an indispensable prerequisite for efficient production and the disappearance of immisering trade. In addition such integration would — through imports — increase competition on the domestic market and thus put firms under pressure to enhance their own competitiveness, which would benefit demand. And attraction of much-needed foreign capital and know-how can also not be secured unless a greater degree of openness is achieved in the Eastern European economies.