Specialization and Cooperation Agreements within the Motor Vehicle Industry of the Council for Mutual Economic Assistance

by Debbie Drezner, Keith Crane

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This Note is a case study of specialization and cooperation in the motor vehicle industry within the Eastern Bloc's Council for Mutual Economic Assistance (CMEA). The main instruments for pursuing specialization and cooperation are treaties called "specialization and cooperation agreements" that specify who is to produce what products within a particular industry. Specialization and cooperation are expected to lead to lower production costs, increased output, and better quality products. The agreements have had limited success, however, in increasing economic integration among CMEA countries and in reducing duplication in production. Effective implementation has been hampered in part by unreliable deliveries, poor planning during agreement development, raw material shortages, obsolete production equipment, and lack of incentives for enterprises to cooperate effectively.

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