The Impact of Trade and FDI on Poverty in Transition Economies: Case Study of Former Soviet Bloc Countries

Abstract

The collapse of Soviet Union in late 1980’s forced all satellite former socialistic countries to integrate with a world economy and this transition period brought big changes to economies of those countries. Trade and FDI have been widely acknowledged as important in transition economies. The objective of this study is to empirically examine the effect of trade and FDI on poverty, using 23 former socialistic bloc countries during 2000 – 2012. The results indicate that higher trade volumes increase poverty rates, while FDI has non - significant impact on poverty. Our findings would be helpful for better understanding the role of FDI and trade in transition economies.