The gains from trade depend on the reallocation of resources, including labour, across firms and sectors. However, workers are unlikely to be fully mobile since there are barriers to sectoral and geographical mobility due to social reasons such as family or existing private and professional...

Management of capital inflows has unexpectedly become a major challenge in transition economies. These countries were expected to have an insatiable demand for foreign capital, and an excess demand for capital inflows was, therefore, predicted by most observers. Foreign investors are also known...