18 unwillingness to report (e.g., trade between the two entities of Bosnia and Herzegovina and Croatia and FR Yugoslavia), the absence of border points (e.g., between Kosovo and Serbia until 2001), and trade going through 'no man's land' (e.g., through the Brcko area, which is not part of any of two entities constituting Bosnia and Herzegovina-). Some of these reasons might have disappeared with the improvement in cooperation among SEE countries, but these are not necessarily captured by the latest available statistics for 2000. In all, while it is anybody's guess how large unrecorded trade is, the point is that actual trade is larger than reported in available statistics.

Considering all these limitations, we shall resort to a variety of approaches including a very simple variant of a gravity analysis. The overall conclusion from the analysis of historical and current trade flows, gravity estimates, the composition of this trade, and comparative assessment of trade flows among founding members of CEFTA and former Soviet republics suggest that the potential for the expansion of intra-SEE-5 trade within the existing productive structures is rather limited.

# **Intra-SEE-5 Trade: Geographic Pattern**

Intra-SEE-5 geographic pattern of trade displays three interesting features (Table 4). First, this is a more important market for SEE-exporters taking up around one-fifth of their total exports than for their imports accounting only for less-than 10 percent of their aggregate imports. The point worth noting is that the value of total exports of goods amounted to around 50 percent of the value of total imports in 2000.

Second, the significance of intra-SEE-5 trade varies considerably across countries. On the import side, shipments from SEE-S suppliers accounted in 2000 for 22 percent of total imports of Bosnia and Herzegovina, 12 percent of FYR Macedonia's imports, but only 2 percent of Croatian and 3 percent of total imports of Albania. On the export side, excluding Albania the variation for other SEE-S economies is low with the shares ranging from 15 percent (Croatia), 21 percent (FR Yugoslavia), 26 percent (FYR Macedonia) and 28 percent (Bosnia and Herzegovina).

Third, geographical SEE-trade patterns reflect to a large extent the legacy of conflicts accompanying the dissolution of the former SFRY. The legacy of the Croat-Serb conflict seems still to shape trade flows. Links between Croatia and Serbia, the two largest countries of the former SFRY, while previously extensive, were mainly broken by the war of the 1990s and never restored. Despite common borders, trade between Croatia and FR Yugoslavia remains minuscule. Bosnia and Herzegovina seems to defy this pattern but only in aggregate country statistics. In fact, large flows of trade with both Croatia and FR Yugoslavia occur at the level of Bosnia and Herzegovina two entities. Trade with Croatia is still limited to the Federation of Bosnia and Herzegovina whereas that with FR Yugoslavia concerns flows in and out of Republika Srpska. On the other hand, FYR Macedonia, which succeeded in staying outside the regional conflicts of the 1990s, has relatively significant trade with all other SEE-S countries.