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COMECON

The Council for Mutual Economic Assistance. This arranged the trade between the former Communist countries. In practice it benefited the Soviet Union more than the other countries whose trade was limited with countries outside the organisation, and therefore insulated from the world market. The USSR gained preferential access to economies some of which in many respects were more advanced than its own. Oil was traded at an artificially low price but so were the products of the other members.

As an economic community its main defect was that there was no market. Investment decisions were made by non-economic criteria. For example Czechoslovakia specialized in streetcars, Hungary in buses, Poland in Trucks. The result tended to be one huge factory which was always inefficient in comparison with a western factory in the same field.

The organization has been dissolved and the former members attempted to trade using dollars, which they didn't have, or by barter. Trade shrank. The former members in Europe have joined the European Union. Vietnam has joined ASEAN.

Last revised 2/09/09


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