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Intereconomics

, Volume 50, Issue 5, pp 274–280 | Cite as

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

  • Karsten Staehr
Baltic States

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.

Keywords

Total Factor Productivity Total Factor Productivity Growth Baltic State Current Account Balance Sudden Stop 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© ZBW and Springer-Verlag Berlin Heidelberg 2015

Authors and Affiliations

  • Karsten Staehr
    • 1
    • 2
  1. 1.Department of Finance and EconomicsTallinn University of TechnologyTallinnEstonia
  2. 2.Eesti PankTallinnEstonia

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