The Shuttle Economy Phenomenon

An overview of the growing shuttle trade in Eastern Europe.

This paper discusses how for thriving capitalist economies with large commercial spaces for retail, the shuttle trade – buying goods abroad on tourist trips to bring back and sell at kiosks or open air markets – seems like an absurd phenomenon. It looks at how for so-called transition economies, shuttling has become a means of survival for workers who cannot find employment and for consumers who cannot afford to buy goods at conventional retail markets. It shows how although the shuttle business has been declining in the last few years, a majority of consumers in Russia and other CIS countries still buy goods at kiosks, open-air markets, informal stores on the ground floors of apartment blocks, or street vendors because prices are much cheaper than in the newer supermarkets.
“The origins and enormous scale of the shuttle trade in “transition” countries can only be understood against the background of the trade environment during the communist period. The exchange and trading system within communist countries was an extension of the state planning system. It was conducted through an annual foreign exchange plan and only a handful of trading agencies were licensed to engage in external trade. The retail trade industry was very small compared to capitalist economies and as a consequence it was inadequately developed to handle the flow of commodities – even in a centrally planned economy.”