From the very beginning of the process of transition in East and Central Europe the Nordic countries embarked on a policy to revitalise the historic links to the Baltic Rim countries in general and to the three Baltic States, Latvia, Lithuania and Estonia, in particular. To some extent this took place in co-operation and competition with other countries with strong historic and economic ties to the region.

The Nordic countries particularly took the lead in the field of facilitating the process of democratisation, and had a certain influence on the institutional development, namely through educational programs for civil servants and to some extent politicians.

In the field of economic development direct aid played an important role in the early years, but relatively quickly multilateral frameworks (EBRD, PHARE-program of the EU) took the lead. Nevertheless economic and political links developed further, both in a bilateral perspective and within the Baltic Council, a consultative body of all Baltic Rim States (Walter 1998).

The purpose of this paper is to give an assessment of the first years of this process on the background of historical developed relations, and the requirements of the transition process in particular. Our attention will focus on the relationship between the development of trade and economic relations and the process of institutional transformation, internal as well as with regard to the new political and economic regime of the region.

Figure 1: Framework of analysis

The Baltic States are in a historic perspective a new phenomena, only independent for approximate 20 years between the two world wars. Nevertheless studies have demonstrated that at least to some extent economic and political traditions differs from other parts of the former Soviet Union (see Laaser & Schrader, 1992). In this perspective the Baltic States has a position somewhere between Poland (and other Central and East European Countries) on the one side and Russia, the potentially largest economy adjacent to the Baltic Rim (Cornett & Iversen 1997, Callsen & Jäger-Roschko 1996). In the long run Russia is probably the most important trade partner in an All European Perspective. In future Russia will undoubtedly be one the most important economies for most countries in the region despite the huge present problems of transition.

The purpose of this paper is to provide an assessment of the contemporary position of the Baltic States in the process of reintegration of the East and Central European Nation in general and of their involvement in the regional system of the Baltic Rim in particular. The framework of analysis is sketched in Figure 1 on the previous page. The decisive or independent variables in our framework are the issues of internal stabilisation (economical as well as political, see section 2) and the participation in international institutional settings (external institutional reintegration) in section 3. The right- hand -side in the figure covers the indicators used in our analysis (mainly trade and to some extent indicators of other economic links, section 4) and the final evaluation of the results in a development perspective (section 5).

2. The Nordic Countries and the Baltic States - Competition or Co-operation

From the very beginning of the transition process in East and Central Europe the Nordic countries focused their attention toward the Southern Rim of the Baltic Sea, and in particular toward the three Baltic States. The Danish Secretary of State was one of the first official visitors in the newly independent states and a huge share of bilateral economic assistance from the Nordic countries were directed toward these three new nations. Despite of attempts to co-ordinate, in particular in the field of political and institutional advice, elements of competition prevail, of course mainly with regard to economic interests. (Strategisk Forum 1998). In particular Estonia - partly for cultural and geographical reasons - developed strong ties to Finland, itself suffering from the transition process in the early 1990's.

2.1 Economic links

Table 1 provides a brief summary of the changes in the trade pattern of the former statetrade countries of the East and the old market-economies of the Western part of the Baltic Rim since 1993. This changes has to be examined on the background of the overall changes in trade patterns taking place in Europe since the early 1990's.

From 1988 to 1992 major changes took place in the trade pattern of CMEA (Council of Mutual Economic Assistance) member countries. On average internal CMEA exports were reduced from 36,8 % to 17,6 percent of total trade. At the same time the AEU-12 share on average almost doubled from 28,8 to 46,9. The changes were are even more significant when the 6 Central and East European countries are considered. Here CMEA exports on average decreased from 31,9 % to 12,1 % (Cornett 1994, p.8).

Regarding trade in the Baltic Region (see annex Table A6) the trade shares of Denmark, Finland and Germany in the Baltic Region has been reduced from 1993 to 1996. Sweden is apparently a special case in the sense that Swedish share of exports to the Baltic region has declined whereas Swedish share of imports from to the Baltic region has increased. All the transition economies in the region have increased their share of trade in the region, although this increases has been relatively modest.


Table 1. Actual trade in the Baltic Rim 1993-96. (Source: IMF, 1997)

Trade is frequently seen to be the first step in the process of developing economic relations between distinct economic areas, usually followed by foreign direct investments (see table 2) and closer economic agreements with regard to trade, investment and co-operation (see table 5 in the next section)

In a regional perspective the most interesting feature is the geographical concentration of FDI from the Nordic Baltic Rim. Compared to trade figures the absence of German predominance is notable. In an All-European perspective the share of the Baltic States is of course small, also when the size of the population and the economy is taken into account. FDI received from the EU increased from 38 Mill ECU in 1993 t0 140 Mill ECU in 1995.


Table 2. FDI in the Baltic Rim (Source: Eurostat, 1998)

Despite the fact that the Baltic States have intensified economic relations to the western markets, strong dependence to the CIS-area persists. It is important to stress that this not is a one-way dependency, but rather a mutual relationship. I.e. Russia still depends on the Baltic States with regard to transport facilities for exports and imports. This gives rise to both risks and challenges for development in the Baltic States, not only on a regional level but also in an European perspective, in particular with respect to infrastructure investments, reinforced by the overcrowded road-connection through Poland and Germany.

2.2 Economic Performance

The process of catching up on the income level in the EU not only requires political and economic reforms (see Cornett & Iversen 1997), but also excess economic growth to reduce the gap. This is a necessary condition to become a full member of the western economic system.

As can be seen from Table 3 Poland has been ahead of the 10 CEEC countries since 1995. With regard to the Baltic States the picture is mixed, but the most recent numbers (and forecasts) indicate a relative high growth performance. A comparison with Figure A1 and A2 in the annex makes the saliency of the catch-up problem evident, since the excess growth compared to the traditional market economies in the region seems to by rather modest.


Table 3. Economic Growth in the Baltic States and Poland (Source: European Economy 1998)

* E: estimates, F: forecast



Table 4. Inflation and Unemployment in the Baltic States and Poland (Source: European Economy, 1998)

The external context for the transition process in the Baltic Rim area is determinded by the established western system, namely the EU, WTO and the UN-system. The single most important framework with regard to our analysis is international trade regime defined by the WTO.

3.1. The trade regime: a brief assesment

The trade regime relevant for this analysis mainly consists of obligations according to international, regional and bilateral agreements. Most important regulatory framework are the obligations according to the so-called European Agreements with the EU (see Table 5 below). With regard to economic agreements the Baltic States position is one step behind the status of Poland, but ahead of Russia. The future status will mainly be determined by the result of the accession negotiations with the EU. For our analysis the trade-regime as stipulated in table 5 constitutes the institutional framework for the trade-flow analysis.

Table 5. The Trade regime of the EU toward CEEC Ultimo 1997 (Source: European Economy, 1997a)

* Estonia, Latvia & Lithuania where not members of WTO when the current source was published


3.2 Economic Transition

With regard to internal economic stabilisation the Baltic states does not constitute an homogenous group, as well as huge differences between the Baltic group and the rest of Central and Eastern Europe still remain. The first table in the annex (Table A1) gives a tentative classification of the status of economic transition in 25 transition economies in CEEC and FSU. The data are obtained from EBRD's Transition Report 1997 (EBRD 1997).

A cluster analysis based on the data from table A1 in the annex suggests, that the 25 transition economies can broadly be divided in three different groups or clusters, see also the note in Figure 2 below. Furthermore the figure seems to suggest that there is a fairly strong empirical relationship between reform progress and economic growth (R² = 0,4).

The three groups are broadly characterised as follows: Group 1 consists of countries that according to EBRD's assessments have moved furthest towards a market economy and the privates sector make up a large share of their economy. Group 2 consists of countries that are lagging behind in the economic transition process. In general the private sector only makes up a fairly small share of the economy in these countries. Group 3 is an intermediary group consisting of countries that have taken steps towards a market economy without having moved as far as the countries in group 1.

For our purposes the most interesting feature of this cluster analysis is that all the countries in the eastern part of the Baltic Rim region are included in group 1. This group includes the countries that have moved furthest towards a market economy and institutional reforms. For the greater Baltic Rim region, including Russia the picture is more differentiated, with Russia lacking behind the smaller countries at the southern shores of the Baltic Sea. If political destabilisation increase, and the economic problems persists, the overall stabilisation of the region could be challenged.

Figure 2: Economic Reform and Growth of The Economies of Transition (Source: EBRD,1997)

Note: Cluster 1: Croatia, Czech Rep., Estonia,, Hungary, Latvia, Lithuania, Poland, Russia, Slovakia, Slovenia
Cluster 2: Azerbaijan, Belarus, Tajikistan, Turkmenistan, Uzbekistan
Cluster 3: Albania, Armenia, Bulgaria, Georgia, Kazakhstan, Kyrgyzstan, Macedonia, Moldova, Romania, Ukraine

Despite of the fact that the cluster-analysis not is able to show significant differences between the Baltic States and Poland, or within the group, the results are valuable at least in two perspectives. Firstly, the results enable us to group the whole range of transition-economies in three groups of which two belongs to over area of analysis. It is worth to have in mind, that a countries not considered homogenous from an genereal perspective, looks much more homogenous from an transitional point of view. Secondly - and for our purpose most important - the analysis shows that the political decision to split the accession-process with regard to EU membership is rather problematic.

Figure 3: Trade and Growth of The Economies of Transition (Source: IMF, 1997 and EBRD, 1997)

From a methodological point of view this cluster analysis illuminates all the traditional critique of (the lack of analytical power) of cluster-analysis. Regardless of the fact that this analysis does not contribute very much to our main focus the Baltic States in a Baltic Sea and European perspective, the findings are relevant in an broader transitional or global context. Figure 3 provides an alternative perspective on the transition economies. Figure 3 suggests that there is a strong degree of co-variation between share of exports destined to the EU-area and economic growth in the transition economies (R² = 0,61). The results are to some extent similar, but at least one interesting feature is visible with regard to the Baltic Rim, where Lithuania exempted from the cluster of the countries with the highest scores on the growth and export-share. In an EU perspective the most interesting feature is, that the five first-round East and Central European countries are within this group.


4. Survey of economic links and estimation of trade potentials

4.1 Trade in the Baltic rim

For obvious reasons trade in the Baltic Rim region is dominated by Germany. But as can bee seen from table 6 and figure 4 the small open market economies in the Baltic Rim account for the largest per capita trade in the region. The transition economies in the Baltic Rim only account for a relatively small share of trade in the area.


Table 6. Economic indicators for the countries of The Baltic Rim (Source: World Bank, 1997 and IMF, 1997)

Note: GDP in PPP is calculated as population multiplied by GDP per capita in PPP.

Figure 4: Exports to Baltic Region USD per capita. 1996 (Source: World Bank, 1997 and IMF, 1997)


4.2 The Gravity Model

In the following section of the paper we will try to estimate future trade in the Baltic Rim. The basic idea behind the estimates is that the geographical pattern of trade in the Baltic Rim will converge to, or approach, the geographical pattern of trade among the existing members of the EU as the political and economic reforms bear fruit.

In the present context the following specification of the gravity model will be used:

Where, X_ij is export from country i to country j.
Y_i is national income measured in purchasing power parities in country i.
Y_j is national income measured in purchasing power parities in country j.
D_ij is the distance in kilometres between the capitals of country i and j.
P₁ is a dummy variable designating that we are dealing with trade between two EU countries.
P₂ is a dummy variable designating that we are dealing with exports from EU to the CEECs.
P₃ is a dummy variable designating that we are dealing with exports from CEECs to EU
P₄ is a dummy variable designating that we are dealing with trade between two CEECs.
a, b₁, b₂, b₃, b_4, b_5, b₆ and b₇ are the parameters of the model.
An overview of the dummy-variables P₁, P₂, P₃ and P₄ can be found in table 7 below.


Table 7. Dummy-variables.

A log transformed version of the model was estimated on trade between the present EU-member countries and the ten CEEC candidates in 1993, 1994, 1995 and 1996. As Luxembourg counts as part of Belgium, we are speaking of 24*23 (= 552) bilateral trade flows.

Trade data were obtained from Direction of Trade Statistics Yearbook (IMF 1997). Income data were obtained from World Bank Atlas (World bank 1995 and 1997). These data are presented in table 6. Information about distances in kilometres was obtained from distance tables in a Danish publication, namely Kraks Store Kortbog Europa (1995). These data were confirmed by comparison with distances from Autoroute Express (computer software). Only the first three dummy variables, P₁, P₂ and P₃ were included in the regression as the value of the fourth is predetermined by the value of the other three.

In earlier studies (Cornett & Iversen 1995 and 1997) the gravity model was applied in two steps. First the model was estimated on internal EU trade and then the estimated parameters were applied on trade between EU and CEEC and internal CEEC trade. The main advantage of the approach taken here is that it utilises much more data containing much more information. This is obtained at the cost of less stable parameters. The reduction of parameter stability is probably due to the significant changes in GDP in the CEEC's during their transition to a market economy (see for example the discussion between on one hand Gros & Gonciarz (1996) and on the other Baldwin (1997) and Kellman (1997).

The results from the regression analysis for 1996 are reported in table 8. The results show that the models' independent variables explain almost 90 percent (88,8) of the variation in the dependent variable. Furthermore, the results in the table show that the income parameters are positive and that the distance parameter, as expected, is negative. All parameters are statistically significant (p<0,0000).

The regression equation is:

545 cases used 7 cases contain missing values

Table 8. Regression Analysis

The gravity model (table 8) reveals the rather interesting result, that b₄ > b₅ > b₆ . This suggests that the relative effect of the dummy variables (P₁, P₂, P₃ relative to P₄) is ranked according to the presentation of the variables in table 6. Similar results were obtained from running the regression for data from 1993, 1994, and 1995. The relative effect of EU-EU trade is greater than EU-CEEC trade, which in turn is still greater than CEEC-EU trade. This seems to lend some support to the popular notion, that trade relations between the EU and the CEEC are asymmetrical to the benefit of EU. The existing trade regime in Europe is primarily based on the Internal Market, which encompasses all the present EU member countries and the so-called Europe Agreements, which covers trade between the EU on one hand and the CEEC's on the other (Baldwin 1994 and Iversen 1995). The results from the gravity model seem to support the notion that the existing trade regime is especially favourable for the EU rather than the other way around. Nevertheless, on the basis of the present analysis it is not possible to conclude that the present trade regime in fact causes this pattern. It should be remembered, that some of the more protectionistic features of the Europe Agreements were supposed to be phased out by 1997. The effects of this still remain to be seen.

In the following section these empirical results will be used to shed light on future trade relations in the Baltic Rim. The discussion will focus on the following questions: Is the trade potential in the Baltic Rim fully exhausted? Can further redirection of trade in Baltic Rim be expected?

4.3 Trade Scenarios

In the following we present two trade scenarios for the Baltic Rim Region: A short term and a long term scenario. Potential trade in the short term scenario is calculated on the basis of the gravity model and the parameter estimates in table 3. The dummy variable P₁ is designated the value 1. Consequently all bilateral trade flows are treated as if they were EU-EU trade relations.

In the long run scenario the same procedure is followed, but here it is combined with a long term growth scenario.

A series of studies seems to confirm that there is a considerable potential for economic growth in the region (Good 1996, Drud Hansen & Skak 1997, Barbone & Zalduendo 1997, Fischer, Sahay & Végh 1997, Denizer (1997), EBRD 1997 and Fischer, Sahay & Végh 1998).

According to the EBRD (1997, p. 98) especially two factors seem to account for the favourable growth prospects in the CEEC's: The first is the high level of skills acquired through the previous regimes' high priority to education. The second is the existence of a technology or productivity gap between the CEECs and more advanced economies The combination of these two factors indicates fertile ground for transfer of technology from the OECD countries for instance through direct foreign investments in Central and Eastern Europe (see also Estrin, Hughes & Todd 1997, p. 27ff.). According to the EBRD these two factors together could contribute to an annual growth rate between 4 and 7 percent. Unfortunately EBRD also points out that the quality of institutions supporting investment in resources and technological innovation is low in the majority of the transition economies. EBRD concludes that the lack of proper institutional frameworks might pull in the opposite direction and reduce annual growth rates by up to 1,5 percentage points. Together these factors should make it possible for the transition economies in CEE and FSU, depending on future reform policies, to obtain annual growth rates between 2,5 and 5,5 percent.

Denizer (1997) and Fischer, Sahay & Végh (1998) use a more formal and integrated approach in that they apply the growth equations of and Levine and Renelt on the economies of transition. These growth equations are described in Table 9.


Table 9. Barro and Levine and Renelt Growth Equations (Sources: Adapted from EBRD (1997), Denizer (1997) and Fischer, Sahay & Végh (1998))

Various long term growth prospects for the countries of Eastern Baltic Rim are presented in table 11. Not surprisingly, as can be seen from Denizers results, future growth in the region is highly dependent on future investments.


Table 10. Long Term Growth Prospects in Eastern Baltic Rim (Sources: EBRD (1997), Denizer (1997) and Fischer, Sahay & Végh (1998))

For our purposes present incomes in the countries of the Baltic Rim were extrapolated for fifteen years using fixed annual growth rates. Incomes in Germany, Denmark, Sweden and Finland were extrapolated with a 2,5 percent annual growth rate. Incomes in Estonia, Latvia, Lithuania, Poland and Russia were extrapolated with a 5,0 percent annual growth rate.

Table 11. Gravity Model Trade Scenario.

We present the results from this exercise in table 11 and 12 above. As can be seen from the tables our estimates suggest that there still is a rather considerable unutilised trade potential in the Baltic Rim. Regardless of future growth in the region we expect that some reorientation of trade will take place in the region. These tendencies will probably be reinforced in the longer run as the countries of Eastern Baltic Rim continues to grow.


5. Conclusions

The title of this paper, 'The Baltic States in an European and Baltic Perspective: Trade and Transition in the Baltic Rim' is too ambitious to provide a appropriate coverage of all relevant aspects of the topic within the space available in one paper. Nevertheless some tentative conclusions are possible. First of all, it is impossible to divide the European and Baltic perspective. The later is a part of the former, but characterised by special features, like spatial proximity, historical links and a common cultural heritage. The second more general conclusion is that the political and economic process of transition and transformation are not dividable in practice, and are strongly dependent on the speed and intensity of reintegration in the institutional framework of the western marked economies.

The analysis in the previous sections makes evident, that the transition process walks hand in hand with huge socio-economic changes in the Baltic Rim. Political and structural changes will be required in the eastern part of the region as well as in the western part or the European Union as a whole, if the ultimate goal of economic equity has to be reached. Market access and non-discrimination in the field of economic transition will still be the guideline for policy, not only with respect to the Baltic Rim but also to the less favoured countries outside the EU-neighbourhood (see cluster 2 and 3 in figure 1).

A successful reintegration has to be based on the principle of reciprocity, and has to be seen in an All-European perspective. The process of transformation is an All-European process, and not only a question of unilateral adaptation in the applicant countries. Economic integration has to go beyond the removal of barriers (negative integration), and include a participation on equal terms for East and Central European countries in the building of a new economic constitution (positive integration). Transition periods and economic transfers are two side of the same coin. The more restricted (limited) the transfer payments, the longer transition-period or more exemptions from EU-rules are required.

5.1 The Baltic States in a Transitional perspective

Despite of the fact that the Baltic States were a part of the Soviet Union for almost 50 years the cluster analysis reported in this paper demonstrated that they at least measured on the included variables are very similar to the main group of East and Central European countries.


Table 13. External imbalances of CEEC (Source: European Economy, 1998)

Note: E: estimates, F: forecast

With regard to the economic aspects of transition our analysis has no indications of significant differences within the group of the former state-trade countries of the Baltic Rim area (Russia is exempted) with regard to economic performance and internal stabilisation (growth, inflation or unemployment). With regard to the issue of external equilibrium all countries have still huge problems. From a political point of view the figures in table 13 illuminates the interesting point, that external balance-problems seems to be largest in Estonia, the only Baltic State included in included in the first wave of enlargements. The low debt-export ratio of the country is of cause important to bear in mind. Similarly the very high debt-export ratio of Poland constitutes a heavy burden for future development.

In the long run external balance-problems are only a crucial factor for economic development, but constitutes a challenge not only for economic but also political stability. A sustainable solution of this problem requires both economic assistance (see section 5.3 below) and most important a solving of the balance of payment problems through a positive trade-balance.

5.2 The Baltic Rim in a Trade perspective

Recent trade data suggest that a reorientation of trade in the Baltic Rim is taken place as a result of economic and political transition and liberalisation of trade. Those trade relations that includes at least one eastern trade partner seems to be of increasing importance.

In our study we use an updated and reformulated gravity model to trace these changes into the future. The results of our gravity model scenarios confirms, that the reorientation of trade in the Baltic Rim is likely to continue and the present tendencies is likely to be reinforced by future economic growth in the region. If this part of the conclusion holds, it lends ample support for the wider perspectives for the regions development presented below.

5.3 The Baltic Rim in a development perspective

The process of transition and recovery in East Europe and in the Baltic states has been challenged not only by the regained influence of traditional political groups in East Europe but also through the reluctance of the EU to open their markets in sectors where the former CMEA-countries are competitive. The only feasible road to avoid further drawbacks is to establish a self sustainable economic system able to handle internal problems of transition in the region, and enable the states to accommodate the external challenges (i.e. the process of enlargement). Reforms in the applicant countries are only the first step in this process. Reforms of the economic system in Western Europe (the EU) are necessary as well. Most urgent are probably the reform of the Structural Funds (see European Commission 1997c, Cornett 1998). Furthermore it is important to adapt EU-assistance policy not only to the internal EU modes of operation but also to take the needs and organisational setting of the receiving countries into consideration.

In a transitional perspective the European Union is the cornerstone of the rearrangement of the economic landscape not only in Europe but also in an Baltic Rim. It is still too early to take this process for granted, despite of the fact that the IGC of Amsterdam at least on the surface paved the road for the first round of eastward enlargement. The pivotal position of the EU does not mean that the EU is the only important factor in this process. With regard to the future economic system a satisfactory accessesion to the EU-system will almost automatically provide a link to the global economic system of WTO arrangements. A solution of the internal EU problems with regard to institutional reforms and the transfer-payments through the budget seems to be a precondition for a successful fullfillment of this pivotal role.

In the field of politics the picture will remain complicated. Individual countries, ethnic groups and especially also the revival of traditional goals in Russian foreign policy and the derived perception of threats in East and Central Europe as well as in parts of the former Soviet Union, constitute decisive features of the regional system. Both in an economic and social perspective the German reunification has proved the saliency of the tremendous challenges facing the Eastern part of the in their attempt to recover after 40 years of command economy. Compared to the of huge transfer payments from West to East the assistance made available by international organisations (EBRD, World Bank and IMF) the EU individual countries are rather limited.

Privat investment - as mentioned in section 2 - will become still more important with respect the economic relationship between the East and Central European Countries and the EU, despite of the fact that the EU-transfers mainly within the framework of PHARE, TACIS and the 'Pre-Accession Strategy' within the framework of the 'Agenda 2000' are of considerable size.

References

Annex :

Table A1: Progress in Transition in Eastern Europe, The Baltic's and the CIS.

Country	Private sectors share of the economy	Large scale privati- zation	Small scale privati- zation	Gover- nance & Restruc- turing	Price liberali- zation	Trade and foreign exchange system	Competi- tion Policy	Banking reform and interest rate liberali- zation	Securities markets and non-bank financial institutions	Overall Legal Reform
Albania	75	2	4	2	3	4	2	2	1,67	2
Armenia	55	3	3	2	3	4	2	2,33	1	3
Azerbaijan	40	2	3	2	3	2,33	1	2	1	1
Belarus	20	1	2	1	3	1	2	1	2	2
Bulgaria	50	3	3	2,33	3	4	2	2,67	2	3
Croatia	55	3	4,33	2,67	3	4	2	2,67	2,33	4
Czech Rep.	75	4	4,33	3	3	4,33	3	3	3	4
Estonia	70	4	4,33	3	3	4	2,67	3,33	3	4
Georgia	55	3,33	4	2	3	4	2	2,33	1	2
Hungary	75	4	4,33	3	3,33	4,33	3	4	3,33	4
Kazakhstan	55	3	3,33	2	3	4	2	2,33	2	2
Kyrgyzstan	60	3	4	2	3	4	2	2,67	2	2
Latvia	60	3	4	2,67	3	4	2,67	3	2,33	3
Lithuania	70	3	4	2,67	3	4	2,33	3	2,33	3
Macedonia	50	3	4	2	3	4	1	3	1	2
Moldova	45	3	3	2	3	4	2	2	2	2
Poland	65	3,33	4,33	3	3	4,33	3	3	3,33	4
Romania	60	2,67	3	2	3	4	2	2,67	2	3
Russia	70	3,33	4	2	3	4	2,33	2,33	3	3
Slovakia	75	4	4,33	2,67	3	4	3	2,67	2,33	3
Slovenia	50	3,33	4,33	2,67	3	4,33	2	3	3	3
Tajikistan	20	2	2	1	2,67	2	1	1	1
Turkmenistan	25	2	2	1,67	2	1	1	1	1
Ukraine	50	2,33	3,33	2	3	3	2	2	2	2
Uzbekistan	45	2,67	3	2	2,67	1,67	2	1,67	2	2

Source: EBRD(1997), Transition Report, London


Table A2: Trade in the Baltic Rim Region 1993. Mill. USD.

Export from:	Denmark	Estonia	Finland	Germany	Latvia	Lithuania	Poland	Russia	Sweden	Total
Denmark	…	23	564	5902	17	35	456	190	3102	10289
Estonia	30	…	132	99	37	33	8	41	107	487
Finland	846	250	…	3413	40	40	383	724	2626	8322
Germany	6686	96	3935	…	94	333	5288	5142	7579	29153
Latvia	86	20	22	178	…	47	20	77	104	554
Lithuania	46	30	14	193	91	…	90	53	51	568
Poland	458	4	303	5189	9	50	…	529	319	6861
Russia	355	154	1391	6478	270	329	1271	…	423	10671
Sweden	3211	80	1840	7585	50	39	422	314	…	13541
Total	11718	657	8201	29037	608	906	7938	7070	14311	80446

Source: IMF (1997): Direction of Trade Statistics Yearbook, Washington.


Table A3: Trade in the Baltic Rim Region 1993. Percentage Distribution.

Export from:	Denmark	Estonia	Finland	Germany	Latvia	Lithuania	Poland	Russia	Sweden	Total
Denmark	0,0	0,0	0,7	7,3	0,0	0,0	0,6	0,2	3,9	12,8
Estonia	0,0	0,0	0,2	0,1	0,0	0,0	0,0	0,1	0,1	0,6
Finland	1,1	0,3	0,0	4,2	0,0	0,0	0,5	0,9	3,3	10,3
Germany	8,3	0,1	4,9	0,0	0,1	0,4	6,6	6,4	9,4	36,2
Latvia	0,1	0,0	0,0	0,2	0,0	0,1	0,0	0,1	0,1	0,7
Lithuania	0,1	0,0	0,0	0,2	0,1	0,0	0,1	0,1	0,1	0,7
Poland	0,6	0,0	0,4	6,5	0,0	0,1	0,0	0,7	0,4	8,5
Russia	0,4	0,2	1,7	8,1	0,3	0,4	1,6	0,0	0,5	13,3
Sweden	4,0	0,1	2,3	9,4	0,1	0,0	0,5	0,4	0,0	16,8
Total	14,6	0,8	10,2	36,1	0,8	1,1	9,9	8,8	17,8	100,0

Source: IMF (1997): Direction of Trade Statistics Yearbook, Washington.


Table A4: Trade in the Baltic Rim Region 1996. Mill. USD.

Export from:	Denmark	Estonia	Finland	Germany	Latvia	Lithuania	Poland	Russia	Sweden	Total
Denmark	0	90	1033	7956	76	167	812	434	4984	15552
Estonia	73	0	354	206	120	97	22	146	396	1414
Finland	1155	935	0	4168	194	164	611	1659	3755	12641
Germany	8862	319	4393	0	292	691	9166	5130	12499	41352
Latvia	69	62	35	325	0	143	17	232	386	1269
Lithuania	109	50	34	491	133	0	110	465	93	1485
Poland	703	35	278	8091	54	224	0	704	592	10681
Russia	386	431	2160	10220	426	1145	2526	0	446	17740
Sweden	5007	261	3432	9217	166	138	997	554	0	19772
Total	16364	2183	11719	40674	1461	2769	14261	9324	23151	121906

Source: IMF (1997): Direction of Trade Statistics Yearbook, Washington.


Table A5: Trade in the Baltic Rim Region 1996. Percentage Distribution.

Export from:	Denmark	Estonia	Finland	Germany	Latvia	Lithuania	Poland	Russia	Sweden	Total
Denmark	…	0,1	0,8	6,5	0,1	0,1	0,7	0,4	4,1	12,8
Estonia	0,1	…	0,3	0,2	0,1	0,1	0,0	0,1	0,3	1,2
Finland	0,9	0,8	…	3,4	0,2	0,1	0,5	1,4	3,1	10,4
Germany	7,3	0,3	3,6	…	0,2	0,6	7,5	4,2	10,3	33,9
Latvia	0,1	0,1	0,0	0,3	…	0,1	0,0	0,2	0,3	1,0
Lithuania	0,1	0,0	0,0	0,4	0,1	…	0,1	0,4	0,1	1,2
Poland	0,6	0,0	0,2	6,6	0,0	0,2	…	0,6	0,5	8,8
Russia	0,3	0,4	1,8	8,4	0,3	0,9	2,1	…	0,4	14,6
Sweden	4,1	0,2	2,8	7,6	0,1	0,1	0,8	0,5	…	16,2
Total	13,4	1,8	9,6	33,4	1,2	2,3	11,7	7,6	19,0	100,0

Source: IMF (1997): Direction of Trade Statistics Yearbook, Washington.


Table A6: Annual Growth of Trade in the Baltic Rim Region 1993-96. Percentage.

Export from:	Denmark	Estonia	Finland	Germany	Latvia	Lithuania	Poland	Russia	Sweden	Total
Denmark	…	57,6	22,4	10,5	64,7	68,4	21,2	31,7	17,1	14,8
Estonia	34,5	…	38,9	27,7	48,0	43,2	40,1	52,7	54,7	42,7
Finland	10,9	55,2	…	6,9	69,3	60,1	16,8	31,8	12,7	15,0
Germany	9,8	49,2	3,7	…	45,9	27,5	20,1	-0,1	18,1	12,4
Latvia	-7,1	45,8	16,7	22,2	…	44,9	-5,3	44,4	54,8	31,8
Lithuania	33,3	18,6	34,4	36,5	13,5	…	6,9	106,2	22,2	37,8
Poland	15,4	106,1	-2,8	16,0	81,7	64,9	…	10,0	22,9	15,9
Russia	2,8	40,9	15,8	16,4	16,4	51,5	25,7	…	1,8	18,5
Sweden	16,0	48,3	23,1	6,7	49,2	52,4	33,2	20,8	…	13,4
Total	11,8	49,2	12,6	11,9	33,9	45,1	21,6	9,7	17,4	14,9

Source: IMF (1997): Direction of Trade Statistics Yearbook, Washington.


Table A7: Change in Percentage Distribution of Trade in the Baltic Rim Region 1993-96. Percentage Points.

Export from:	Denmark	Estonia	Finland	Germany	Latvia	Lithuania	Poland	Russia	Sweden	Total
Denmark	…	0,0	0,1	-0,8	0,0	0,1	0,1	0,1	0,2	0,0
Estonia	0,0	…	0,1	0,0	0,1	0,0	0,0	0,1	0,2	0,6
Finland	-0,1	0,5	…	-0,8	0,1	0,1	0,0	0,5	-0,2	0,0
Germany	-1,0	0,1	-1,3	…	0,1	0,2	0,9	-2,2	0,8	-2,3
Latvia	-0,1	0,0	0,0	0,0	…	0,1	0,0	0,1	0,2	0,4
Lithuania	0,0	0,0	0,0	0,2	0,0	…	0,0	0,3	0,0	0,5
Poland	0,0	0,0	-0,1	0,2	0,0	0,1	…	-0,1	0,1	0,2
Russia	-0,1	0,2	0,0	0,3	0,0	0,5	0,5	…	-0,2	1,3
Sweden	0,1	0,1	0,5	-1,9	0,1	0,1	0,3	0,1	…	-0,6
Total	-1,1	1,0	-0,6	-2,7	0,4	1,1	1,8	-1,1	1,2	0,0

Source: IMF (1997): Direction of Trade Statistics Yearbook, Washington.


Table A8: Short Term Gravity Model Scenario. Mill. USD.

Export from:	Denmark	Estonia	Finland	Germany	Latvia	Lithuania	Poland	Russia	Sweden	Total
Denmark	…	33	777	29334	51	99	1679	995	2577	35544
Estonia	36	…	4519	481	92	56	184	589	423	6380
Finland	781	4215	…	3897	486	339	539	2851	3703	16811
Germany	27340	415	3613	…	706	1583	26454	11711	9406	81227
Latvia	54	91	518	810	…	194	376	793	271	3107
Lithuania	104	55	355	1788	191	…	1179	1378	271	5322
Poland	1652	168	527	27919	346	1102	…	4295	1186	37195
Russia	949	522	2707	11991	708	1248	4167	…	3201	25493
Sweden	2551	389	3647	9989	250	255	1194	3320	…	21594
Total	33467	5887	16663	86209	2830	4876	35773	25932	21038	232674

Source: IMF (1997): Direction of Trade Statistics Yearbook, Washington.


Table A9: Actual Trade as Percentage of Short Term Potential.

Export from:	Denmark	Estonia	Finland	Germany	Latvia	Lithuania	Poland	Russia	Sweden	Total
Denmark	…	271,4	133,0	27,1	149,7	169,3	48,4	43,6	193,4	43,8
Estonia	204,2	…	7,8	42,9	130,8	173,4	11,9	24,8	93,6	22,2
Finland	147,9	22,2	…	107,0	39,9	48,3	113,4	58,2	101,4	75,2
Germany	32,4	76,8	121,6	…	41,4	43,7	34,6	43,8	132,9	50,9
Latvia	127,1	68,1	6,8	40,1	…	73,6	4,5	29,2	142,7	40,8
Lithuania	104,9	91,5	9,6	27,5	69,5	…	9,3	33,8	34,3	27,9
Poland	42,6	20,8	52,7	29,0	15,6	20,3	…	16,4	49,9	28,7
Russia	40,7	82,6	79,8	85,2	60,2	91,7	60,6	…	13,9	69,6
Sweden	196,3	67,2	94,1	92,3	66,3	54,1	83,5	16,7	…	91,6
Total	48,9	37,1	70,3	47,2	51,6	56,8	39,9	36,0	110,0	52,4

Source: IMF (1997): Direction of Trade Statistics Yearbook, Washington.


Table A10: Long Term Gravity Model Scenario. Mill. USD.

Export from:	Denmark	Estonia	Finland	Germany	Latvia	Lithuania	Poland	Russia	Sweden	Total
Denmark	0	76	1350	50999	116	226	3842	2275	4481	63365
Estonia	81	0	10242	1089	274	167	549	1757	959	15119
Finland	1357	9643	0	6775	1113	776	1233	6523	6438	33859
Germany	47532	951	6282	0	1615	3621	60525	26794	16352	163671
Latvia	123	271	1173	1836	0	579	1122	2366	613	8084
Lithuania	235	163	805	4053	570	0	3517	4109	615	14068
Poland	3744	501	1195	63277	1032	3285	0	12811	2688	88533
Russia	2151	1556	6135	27177	2111	3723	12429	0	7254	62538
Sweden	4435	889	6340	17367	573	583	2731	7596	0	40514
Total	59659	14050	33522	172573	7405	12962	85949	64231	39401	489751

Source: IMF (1997): Direction of Trade Statistics Yearbook, Washington.


Table A11: Projected Annual Growth In Long Term Gravity Model Scenario.

Export from:	Denmark	Estonia	Finland	Germany	Latvia	Lithuania	Poland	Russia	Sweden	Total
Denmark		-1,1	1,8	13,2	2,9	2,0	10,9	11,7	-0,7	9,8
Estonia	0,7		25,1	11,7	5,6	3,7	23,9	18,0	6,1	17,1
Finland	1,1	16,8		3,3	12,4	10,9	4,8	9,6	3,7	6,8
Germany	11,8	7,6	2,4		12,1	11,7	13,4	11,7	1,8	9,6
Latvia	3,9	10,3	26,4	12,2		9,8	32,2	16,7	3,1	13,1
Lithuania	5,3	8,2	23,5	15,1	10,2		26,0	15,6	13,4	16,2
Poland	11,8	19,4	10,2	14,7	21,7	19,6		21,3	10,6	15,1
Russia	12,1	8,9	7,2	6,7	11,3	8,2	11,2		20,4	8,8
Sweden	-0,8	8,5	4,2	4,3	8,6	10,1	6,9	19,1		4,9
Total	9,0	13,2	7,3	10,1	11,4	10,8	12,7	13,7	3,6	9,7

Source: IMF (1997): Direction of Trade Statistics Yearbook, Washington.



Figure A1: Economic Growth in The Market Economies in The Baltic Rim (Source: OECD 1997)



Figure A2: Economic Growth in The Transition Economies in The Baltic Rim (Source: EBRD 1997)