Norwegian Institute of International Affairs, Oslo

^*I am indebted to Lars Lundberg for helpful suggestions on the methodology employed in this paper. I thank colleagues at the Norwegian Institute of International Affairs and an anonymous referee for useful comments on previous versions of the paper. Financial support from the Nordic Economic Research Council and the Norwegian Research Council are gratefully acknowledged.

Abstract

This paper estimates the effects of changes in trade policies on trade between the Nordic countries and selected countries in Central and Eastern Europe. First overviewing historical trade patterns, it compares actual and potential trade flows. Estimates for the proportion of actual trade that might be ascribed to trade liberalization are presented. Results for the Nordic countries are compared with those for the EC and EFTA. Trade liberalization appears to have had a sizeable impact on the Nordic countries' trade with the CEECs, particularly on trade with Poland. In this case, the effects of liberalization tended to be larger for the Nordic countries than for the EC and EFTA. More generally, the results suggest that trade policies do matter, as the largest effects were found for those countries that were further along in the liberalization process.