Estimation of Kazakhstan’s trade potential in the framework of the Custom Union

The paper identifies the features and determinants of Kazakhstan's foreign trade with other members of the Customs Union of Russia, Kazakhstan and Belarus (CU), and estimates the degree of utilization of its trade potential for 1995-2011. The participation in the CU has led to an increase of Kazakhstan’s turnover with Russia and Belarus mainly due to imports from these countries, while the share of exports to these countries in its total exports has been declined since 2011. The main reason is the achievement of the potential level of mutual trade for Kazakhstan. Gravity models confirms that the inter-industry trade between the CU’s countries based on the comparative advantages comes to a standstill and to further expand their mutual trade, countries should specialize in the expansion of intra-industry trade.