Romania's Foreign Trade and of Other Former Communist Countries in 2003-2012

Background

In the literature there are a large number of studies that explaining relationship between country size, trade openness and political system.

For example, Alesina and Wacziarg (1998) explain that country size, government size and trade openness are interconnected. They suggest that the determination of country size as arising from a trade-off: large countries can afford to have smaller governments (and therefore lower taxes) and they already benefit from a sizable market which reduces their need to be open to trade, but they must bear the cost of cultural heterogeneity.

Guerrieri and Vergara Caffarelli (2012) analyzed the relationship between international fragmentation of production, trade openness, and global export performance in the European Union (EU) from 2000 to 2009 estimates an error correction model on the panel of the EU Member States and finds that inter-European fragmentation and openness significantly improve their long-run export performance. Policy implications could be that restrictive policies preventing firms from internationalizing production would weaken a country's position in global production networks, with long-term negative effects on domestic jobs and growth.

Referring to the last years, the Romanian authors Constantin, Goschin and Danciu (2011) estimated that the current crisis has put into a new light the significance of economic governance quality as an essential ingredient for reducing the risk of crises and for dealing with their consequences. Economic governance institutions can affect full employment, capital accumulation, the regulatory regimes impact on performance in the gas, electricity and water industries.