Openness and competitiveness in the former Soviet republics.

Summary Our work focuses on how the former Soviet republics integrate into the world market. We show that a sudden exposure of these economies to external competition would threaten their industrial fabric and mutual trade. The relative price shock from trade liberalization would play a major role in this sequence. The danger of recession would be aggravated by the disintegration of the USSR as a trade and currency area. The objective of our work is to contribute to the reflection on how to minimize the costs of the transition of the ex-Soviet economies to the market. We consider the adoption of temporary protection mechanisms. We study the prospects for the re-establishment of a monetary order in the region. In particular, we attempt to assess the usefulness of a payments union associated with a common tariff system for all the republics.