goods in each country. The decision of companies to spread production across countries results in aggravation of the position of low-skilled workers, and put in consideration to wage subsidies for low -skilled workers (FEENSTRA R.C., 1998). Additional gains from trade are determined from reductions in aggregate delivery costs owing to scale economies (CUKROWSKI J., FISCHER M.M., 1999).
The tariff and untariff methods are related to the important instruments of international trade policy. The existence of the untariff barriers provides arbitrary form of country behavior, and creates uncertainty in trade relations.
Researchers point out that a country may have an incentive to use tariffs under imperfect competition when price exceeds marginal costs, so that a country which imports such goods pays a rent to the foreign firm (unless the firm happens to earn only normal profits). (BRANDER J.A., SPENCER B.J., 1981). Tariff peaks make damages to the economic development of poor countries. Fully one-third of exports of the poorest development countries face tariff peaks in at least one of the four major markets, the United States, Japan, Europe, or Canada (Global Economic Prospects, 2002).
The analysis of the above mentioned approaches confirms the importance of the modern trade theory at present time. The result of the functioning Soviet planned economy was the predominance of trade relation among the former Soviet republics, small trade flows with the rest of world, the development of specialization rather than diversification within the republics. Since the collapse of the Soviet Union the Russian Federation starts providing the integration policy into the world trading system. Russia has country-specific advantages, and is interested in reorienting its trade toward market economies, in receiving potential trade benefits. The elaboration an effective trade policy provides gains from increases trade specialization and exchange of goods across countries transmit new growth to countries through robust demand. Gains from trade of intermediate inputs result to an outward shift in the production frontier for final goods in the countries, and contribute economic growth.
2. Russia's foreign trade performance and structure
The assessment of the results of world economic development demonstrates the improvement of economic situation in Russia at the end of the XX-th century. The expansion of consumer and investment demand, the rise of import goods deliveries stimulate the growth of GDP, industrial production, fixed capital formation, trade surplus, and the increase of the real incomes of population in the country. Economic growth is accompanied with stabilizing ruble exchange rate, and fast increase of trade surplus. Leading economists and international forecasts foresee the future economic growth in case of proceeding the economic reforms in transitional countries and high world oil prices (Fig. 1).
Nevertheless of the marked positive tendencies in Russia the World Bank study highlights the existence of the following basic economic problems: the domination of the large firms, mostly dealing with in raw materials, low productivity growth, and an absence of the effective mechanism of the implementation economic reforms (The Economist, 2002).
The analysis of Russia's balance of payments data in 2000-2002 demonstrates current account surplus. Trade surplus expands to a record $ 60 billion or 25 % of GDP in 2000 (Tab. 1). Decline in income from export of goods is compensated for by rising services export in 2001.
The financial account analysis depicts the reduction of capital flight from country. Foreign direct investment (FDI) is the most acceptable instrument from the point of the stability of the balance of payments in Russia. FDI growth stimulates the development of machinery, transport sector, food services in Russia. The liabilities of the rest investments are decreased in the balance of payments.
The empirical assessment OGUSTU (2001) of the supply export function and the demand function from FDI and other parameters demonstrates the statistical significance of results. It confirms the reintegration process of the former Soviet Union countries. FDI inflow influences the trade diversification, and promotes the development of the bilateral economic relations among countries.
The model for predicting the potential effects of FDI of PANTELIDIS, KYRKILIS (1995) is aimed to determine the necessary conditions for export promoting FDI, import substituting FDI, import complementary FDI, and export reducing FDI in Eastern European countries. These conditions specify the relationship between the transformation process and country's trade openness. The implication of the research depicts that the host country production should be internationally competitive in order to avoid any balance of payments problems.
The negative net errors and omissions demonstrate the improvement of unrecorded capital outflow. The recorded private capital net outflows and net errors and omissions amount to less than $ 3.5 billion or under 5 % of GDP (i.e. the average 2001 level). The rise in foreign currency and gold reserves in the second quarter 2002 (by $ 7 billion to $ 44 billion) suggest further decreasing