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Economic Growth and Convergence in the Baltic States

Caught in a Middle-Income Trap?

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. Karsten Staehr (Tallinn University of Technology and Eesti Pank) discusses whether the Baltic states might become caught in a middle-income trap with modest growth and slow convergence. Given their deep crises, weaknesses in education, simple production and export contents, institutional constraints, and rapidly ageing populations, a middle-income trap cannot be ruled out for the Baltic states. Much of the discussion here may also be applicable to other EU countries from Central and Eastern Europe, and to some Southern European countries severely affected by the global financial crisis.


Figure of the Month

GDP Effects of Structural Reforms

This figure from Werner Roeger, Janos Varga and Jan in 't Veld's Forum article The Growth Impact of Structural Reforms in the EU shows the impact of structural reforms on GDP for member states after five, ten, twenty and fifty years. Click on the image for more information.


Structural Reforms in the EU – Policy Prescriptions to Boost Productivity

Productivity-enhancing structural reforms are crucial to the economic prospects of the EU. Indeed, such reforms are even more urgent in the current environment in which many economies are reaching the limits of the policy support they can provide to shore up demand. Moreover, even as some of the crisis-related effects fade, demographic headwinds loom, further strengthening the case for boosting productivity. The key question is how to identify, prioritise and calibrate the reforms that best suit each country’s situation. This Forum examines specific barriers to enhanced productivity within the EU. The authors, who include experts from the OECD, IMF and European Commission, put forth policy proposals to offset the secular slowdown apparent in advanced economies and take better advantage of the EU’s vast economic potential.


Quote of the Month

Refugee Crisis

"Humanism does not stop at national borders. It is an obligation that is to be shouldered together by all EU countries."

- from Thomas Straubhaar's Editorial Towards a European Refugee Policy

Editor's Choice

Has the Eurozone Been Stabilised or Will EMU Fall Apart?

In early 2010, as the risk of sovereign default in Greece first emerged, the Intereconomics Forum invited several experts to examine the options available to EU policymakers. Eight months later, six of the same authors returned to reassess the situation. Today, these experts' views from five years ago are enlightening to read. From the Irish bailout to the precarious status of Portugal, not to mention the potentially disastrous situation looming in Spain, our contributors were uncertain whether EU policymakers were up to the challenge of defending the euro. Nonetheless, most of these economists still saw ways for the EU to escape the crisis without being forced to abandon the common currency.



Towards a European Refugee Policy

The refugee crisis in Europe is filled with drama and tragedy, but Thomas Straubhaar (University of Hamburg and Transatlantic Academy) also sees it as an opportunity. First, economists have clearly and conclusively demonstrated that migration increases economic efficiency by equalising imbalances and using the surplus of workers in some countries to resolve labour force shortfalls in others. Second, the current crisis could provoke the European Union member countries to face reality and to accept that migration – and especially refugee – policies are no longer a competence that individual states can handle efficiently, ideally resulting in an agreement on a common EU migration and refugee policy.


Volume 50 · 2015 · issue 5

Current Issue

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Most popular articles

  1. Austerity Measures in Crisis Countries – Results and Impact on Mid-term Development

    Vassilis Monastiriotis, Niamh Hardiman, Aidan Regan, Chiara Goretti, Lucio Landi, J. Ignacio Conde-Ruiz, Carmen Marín, Ricardo Cabral

  2. The Impact of the Financial Crisis on the Real Economy

    Daniel Gros, Cinzia Alcidi, Michael Biggs, Thomas Mayer, Bart van Ark

  3. The Impact of the Financial and Economic Crisis on World Trade and Trade Policy

    Louise Curran, Hubert Escaith, Jean-Jacques Hallaert, Claude Barfield, Simon J. Evenett, Georg Koopmann

  4. Which Industrial Policy Does Europe Need?

    Mariana Mazzucato, Mario Cimoli, Giovanni Dosi, Joseph E. Stiglitz, Michael A. Landesmann, Mario Pianta, Rainer Walz, Tim Page

  5. Greece’s New Agreement with Europe: Is This Time Different?

    Paul B. Kazarian, Theodore Pelagidis


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