Changing Trade Patterns after Conflict Resolution in the South Caucasus

Polyakov, Evgeny

World Bank, Washington, DC

关键词: AIR CARGO;    APPAREL;    AVERAGE TARIFF;    BALANCE OF PAYMENTS;    BUSINESS ENVIRONMENT;   

DOI  :  10.1596/1813-9450-2593
RP-ID  :  WPS2593

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Since the breakup of the USSR, the SouthCaucasus region has experienced a range of politicalconflicts, resulting in a number of hot and cold wars andborder closures. The author analyzes the probably short-termimpacts of peace in the region as a result of a resolutionof the conflict between Armenia and Azerbaijan over theNagorney Karabakh region and an end to the associated tradeblockades, with an emphasis on Armenia, Azerbaijan, andGeorgia. The conflict has seriously distorted trade flows inthe region, disrupted transport routes, and stifled exportand import opportunities for Armenia and Azerbaijan. Georgiahas enjoyed higher-than-normal transit through itsterritory. Trade has stopped in gas (from Azerbaijan toArmenia) and electricity (from Armenia to Turkey). Transporttariffs are unusually high, aggravated by government-imposedtransit fees (taxes). Over time, trade restrictions haveeased and trading partners have found ways to conduct tradedespite closed borders and blockades--but at a cost.Applying a gravity model to regional trade, the authorconcludes that South Caucasus countries trade enough withthe CIS countries and politically friendly neighbors, buttoo little with the European Union, the United States, andhostile neighbors. Lifting the blockades would alleviatetrade distortions and bring about short-term improvements,including: 1) More rational trade flows; 2) A resumption of(or an increase in) regional trade in major commodities suchas energy; and 3) Lower prices or higher profit margins (orboth) on some important consumption and production goods.With peace, Armenia could more than double its exports ifAzerbaijani and Turkish markets open, which could reduceArmenia's trade deficit by a third to a half andincrease its GDP by 30 percent. Improving transport routeswould produce immediate savings and relieve pressure ondomestic prices, especially for energy. Azerbaijan couldincrease its exports by $100 million, or 11 percent of 1999levels, reducing its trade deficit by a quarter and raisingits GDP by 5 percent. Its exports and imports would benefitfrom transport savings. Transit through Georgia mightdecline, but probably not by more than a quarter of thefreight service surplus.