In the late 1980s and early 1990s, the Soviet Union collapsed. The Soviet Union comprised Russia and some of the countries that now make up eastern Europe and central Asia. It was a planned economy, run from Moscow by the Communist Party. Following this collapse, countries in the former Soviet Union and elsewhere in the former Soviet blocwith a total of close to 300 million workersopened their borders to international trade.

Assume that Germany was a capital-intensive country, while the former Soviet bloc states were labour-intensive. Use the analysis in this section to identify likely winners and losers from this shock to global trade in:

(a) Germany

(b) the countries of the former Soviet bloc