Three Essays on Current International Trade Issues In Transitional Economies

This research explores three current international economics issues affecting transitional economies. The first essay evaluates the relation between trade openness and economic growth for the countries of the former USSR, after their independence. The paper challenges the notion that countries that open their economies grow faster and more steadily than those that remain closed. To prove this, the study contrasts 2 different methodologies. First, it uses a standard empirical econometric model, based on cross-country time-series analysis, comparing these results with a specific country study analysis. The results prevent us from concluding on the usefulness of openness to enhance growth. Closed economies exhibit higher growth rates than open economies, but at specific sectorial analysis the results are mixed. The second essay is about the effectiveness of unilateral economic sanctions, using a case study: The US embargo towards Cuba. The study claims the duration of sanctions work in favor of the target nation, proving the embargo has failed to generate the economic distress that would force Havana to abandon its socialist project, because Cuba has implemented a “substitution strategy” by replacing the leading trade partners, and offsetting the adversities of the sanctions. The methodology used in this case study is the scenario building model, showing that the most dominant scenario is that one in which the target finds new trade partners, seeking for new rent opportunities, and not willing to comply with the sender's policy. An in depth study of Cuba's trade direction shows how Cuba has replaced its trade partners when it has lost access to its main commercial markets. The third essay explores on the determinants of FDI, aimed to prove that running trade surplus with a rich country does not guarantee persistent FDI inflows as the China-US international economic patterns suggest. Conducting an empirical analysis to observe the correlation of several variables related to China-US FDI trends, the results reveal that the evidence is quite China specific, that the US has more FDI in countries other than China, and that there is a time mismatch between American FDI in China and the large accumulation of Treasury securities by China.