caa a22 4500 386312346 CHVBK 20180307111552.0 cr unu---uuuuu 161130s1988 xx s 000 0 eng 10.1017/S0020818300034007 doi S0020818300034007 pii (NATIONALLICENCE)cambridge-10.1017/S0020818300034007 Brada Josef C. Professor of Economics at Arizona State University, Tempe. Interpreting the Soviet subsididzation of Eastern Europe [Elektronische Daten] [Josef C. Brada] In trade among the members of the Council for Mutual Economic Assistance (CMEA), prices of raw materials are lower and those of manufactured goods higher than comparable world prices. Because the Soviet Union is a net exporter of raw materials to, and net importer of manufactures from, the other CMEA countries, it benefits less from CMEA trade than it would from trading with the rest of the world, and the other CMEA members benefit more. This redistribution of the gains from trade is generally seen as a form of subsidization. One explanation of these subsidies is that they represent Soviet payments for political and military benefits provided by East European regimes; another is that the subsidies compensate Eastern Europe for the economic burden imposed by central planning and extensive economic ties to the Soviet Union. I argue that neither of these explanations is consistent with the type of economic and political relations that one would expect of the Soviet and East European regimes. In their place I offer an alternative explanation based on the Heckscher-Ohlin model of comparative advantage. The distribution of CMEA subsidies is shown to reflect the distribution of gains from trade that would arise among any group of economies forming a preferential trading scheme. I also argue that the willingness of members to belong to CMEA, even at the expense of paying subsidies, is that CMEA can be viewed as a club that provides benefits to members while imposing costs that may to some extent be unequal and unpredictable. Copyright © The IO Foundation 1988 International Organization Cambridge University Press 42/4(1988), 639-658 0020-8183 42:4<639 1988 42 INO https://doi.org/10.1017/S0020818300034007 text/html Onlinezugriff via DOI 1 research-article jats NATIONALLICENCE 856 40 https://doi.org/10.1017/S0020818300034007 text/html Onlinezugriff via DOI NATIONALLICENCE 100 1- Brada Josef C. Professor of Economics at Arizona State University, Tempe NATIONALLICENCE 773 0- International Organization Cambridge University Press 42/4(1988), 639-658 0020-8183 42:4<639 1988 42 INO CC0 http://creativecommons.org/publicdomain/zero/1.0 nationallicence BK010053 XK010053 XK010000 NATIONALLICENCE NATIONALLICENCE NL-cambridge