East-West Economic Relations : A Historical View

Abstract

The recent political events in eastern Europe have set stage for a strengthening of east-west relations but, so far, progress on the economic front has not been very impressive. This lack of economic dynamism may have historical roots. For the last 40 years the east European economies have been shaped to fulfil socialist needs, particularly those in the Soviet Union. Hence, a return to the pre-war patterns of east-west trade is not for tomorrow. This note tries to outline the changes in east-west economic relations from the Treaty of Versailles to the Gorbachev era. First it looks into the economic impact of the "cold war"; then it examines the changes between 1950 and 1980; and, finally, considers the prospects open by the new political environment.