How does regional economic integration impact trade in small economies? Evidence from Armenia and Kyrgyzstan’s EAEU accession

Salima Bekbolotova, Nodir Djanibekov and Thomas Herzfeld

EconStor Open Access Articles and Book Chapters, 2026, vol. 67, issue 7, 829-857

Abstract: The debate over economic integration and its effect on small economies remains a contested issue. While economic unions can foster trade creation and growth, they also pose risks of trade diversion and unequal gains. These concerns are particularly relevant for small post-Soviet economies yet remain understudied. This study examines the impact of Armenia's and Kyrgyzstan's accession to the Eurasian Economic Union (EAEU) on their trade using a Dynamic Multilevel Model with a Latent Factor term. The findings indicate that EAEU membership increased aggregate exports in both countries, with stronger effects in Armenia. Armenia also experienced a significant rise in agri-food exports, while Kyrgyzstan's agri-food imports declined. No definitive effects were found for aggregate imports, Kyrgyzstan's agri-food exports, or Armenia's agri-food imports. We attribute these variations in trade gains to persistent intra-union trade barriers, new external trade restrictions, and differences in the structural composition of exports. The study contributes to the limited literature on post-Soviet economic integration, employing a Bayesian quasi-experimental approach to enhance causal inference. By analyzing the EAEU's impact on Armenia and Kyrgyzstan, we provide insights into the trade-offs of regional integration for small economies facing increased market access and evolving trade barriers.

Keywords: Eurasian economic union; agri-food trade; Dynamic Multilevel Model; post-Soviet economies (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:espost:343981

DOI: 10.1080/15387216.2025.2475904

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