(4) Why CT is Growing
CT in its many forms can be considered a response to the difficulties
facing both industrial and developing countries. CT is vital for centrally
planned Eastern European countries as a means of overcoming the uncertainty
of domestic production plans and achieving the bilateral balancing of trade. It
is also required by Eastern European countries as a means of stimulating
Western technology transfers. Developing countries need countertrade in order
to finance imports from each other instead of relying on the conventional
imports-for-cash method. CT transactions are also required by developing
countries as a means of enhancing their regional economic integration and their
political solidarity. Industrial countries would prefer CT if the goods
countertraded were more valuable to them than money. For all of these
reasons, countertrade is growing and is expected to grow as long as the need
for it exists by both parties.
(5) Flows of Countertrade Goods
CT transactions currently involve most of the countries of the world.
However, to determine the directions or the flows of countertraded goods, it is
important to start by determining the locations of the partner countries.
Geographically, there are three groups of CT partner countries: North (which
includes the 24 OECD member countries), East (which includes the Eastern
European countries) and South (which includes all the developing countries).
Using these geographic groups, we can distinguish the following flows of CT
goods:
a) The East/West direction, commonly called West/West, is the most
important in trade relations between Western countries, including
the United States and Canada, and Eastern European countries and
other centrally planned economies. The OECD has estimated the
value of Western exports to Eastern European countries through
CT transactions at US$ 35 billion during the period between 1969
and 1979. The most common forms of CT include the transfer of
technology and know-how and the sale of machinery and
equipment for natural resources. One of the most important
examples of a CT
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