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Abstract

The gravity model is used to assess the impact of disintegration on trade among the former constituent republics of three demised federations in central and eastern Europe: the Soviet Union, Yugoslavia, and Czechoslovakia. The authors find evidence of a very strong home bias around the time of disintegration, with trade exceeding normal trade intensity 24-fold (for Slovenia and Croatia) to 43-fold (the former Soviet Union and Czechoslovakia). Disintegration was followed by a sharp fall in trade intensity, although the legacy of a common past remains strong. By 1998, trade relations still exceeded the normal level 2-fold in the case of Slovenia and Croatia, 7-fold for the former Czechoslovakia, 13-fold for the Baltics, and 30-fold for Belarus, Russia, and Ukraine. Such trade intensities surpass the effects of formal preferential trade areas such as the EU or the impact of reunification on trade between East and West Germany.