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Economic Growth and Convergence in the Baltic States: Caught in a Middle-Income Trap?

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  • Karsten Staehr

Abstract

The Baltic states experienced strong economic growth and a rapid closing of the income gap with developed economies until the onset of the global financial crisis. Since then they have seen a marked slowdown of economic growth. This raises the issue of whether the Baltic states might become caught in a middle-income trap with modest growth and slow convergence. Such a trap may stem from a lack of coordination among different actors in the economy, holding back the growth of productive capacity. Based on the results of empirical studies, it is argued that a middle-income trap cannot be ruled out for the Baltic states given their deep crises, weaknesses in education, simple production and export contents, institutional constraints, and rapidly ageing populations. Policymakers may seek to facilitate faster and more stable growth by taking measures that address a number of structural coordination problems in the Baltic states. Copyright ZBW and Springer-Verlag Berlin Heidelberg 2015

Suggested Citation

  • Karsten Staehr, 2015. "Economic Growth and Convergence in the Baltic States: Caught in a Middle-Income Trap?," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 50(5), pages 274-280, September.
    • Handle: RePEc:spr:intere:v:50:y:2015:i:5:p:274-280
    DOI: 10.1007/s10272-015-0551-1
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    Cited by:

    1. Stöllinger, Roman & Leitner, Sandra M. & Zavarska, Zuzana, 2023. "Functional specialisation and working conditions in Europe," Working Paper Forschungsförderung 284, Hans-Böckler-Stiftung, Düsseldorf.
    2. Jaan Masso & Vladyslav Soloviov & Kerly Espenberg & Inta Mierina, 2019. "Social convergence of the Baltic states within the enlarged EU: Is limited social dialogue an impediment?," Chapters, in: Daniel Vaughan-Whitehead (ed.), Towards Convergence in Europe, chapter 2, pages 35-77, Edward Elgar Publishing.
    3. Jorge Durán, 2019. "FDI and Investment Uncertainty in the Baltics," European Economy - Economic Briefs 043, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    4. Artiom Volkov & Tomas Balezentis & Mangirdas Morkunas & Dalia Streimikiene, 2019. "In a Search for Equity: Do Direct Payments under the Common Agricultural Policy Induce Convergence in the European Union?," Sustainability, MDPI, vol. 11(12), pages 1-15, June.
    5. International Monetary Fund, 2015. "Republic of Estonia: Selected Issues," IMF Staff Country Reports 2015/337, International Monetary Fund.
    6. Gil-Alana, Luis A. & Gupta, Rangan & Shittu, Olanrewaju I. & Yaya, OlaOluwa S., 2018. "Market efficiency of Baltic stock markets: A fractional integration approach," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 511(C), pages 251-262.
    7. Rasmus Bøgh Holmen & Nicolas Gavoille & Jaan Masso & Arūnas Burinskas, 2023. "Internationalization in the Baltic Regional Accounts: A NUTS 3 Region Dataset," Data, MDPI, vol. 8(12), pages 1-32, November.
    8. Christenko Aleksandr & Martinaitis Žilvinas & Krūminas Pijus, 2023. "From Socialism to Capitalism: Low-Skill-Biased Change in the Baltics during the Transition and Beyond," TalTech Journal of European Studies, Sciendo, vol. 13(1), pages 253-285, June.
    9. Karsten Staehr, 2018. "Capital flows and growth dynamics in Central and Eastern Europe," Post-Communist Economies, Taylor & Francis Journals, vol. 30(1), pages 1-18, January.
    10. Feher, Andrea & Stanciu, Sorin & Iancu, Tiberiu & Adamov, Tabita Cornelia & Ciolac, Ramona Mariana & Pascalau, Raul & Banes, Adrian & Raicov, Miroslav & Gosa, Vasile, 2022. "Design of the macroeconomic evolution of Romania's agriculture 2020–2040," Land Use Policy, Elsevier, vol. 112(C).
    11. Pataraia Larisa & Geradze Revaz & Dushuashvili Tatuli, 2017. "Financial sector analysis in the cluster theory context (Georgian case)," Technology audit and production reserves, 1(33) 2017, Socionet;Technology audit and production reserves, vol. 1(4(33)), pages 36-42.
    12. Vladimir A. Shamakhov & Natalia V. Eremina & Nikolay M. Mezhevichc, 2019. "Main Characteristics of the Baltic Countries Political Development and their Economic Consequences," Administrative Consulting, Russian Presidential Academy of National Economy and Public Administration. North-West Institute of Management., issue 3.

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