Two small countries, Iceland and Latvia, were severely affected during the global crisis in 2008. Iceland was the first to be hit and Latvia the hardest hit. Two fundamental differences influenced their response. Iceland’s banking system was in local ownership and Iceland was not an EU member state, but Latvia was in the EU and […]
Economic Austerity And Outward Migration
[clickToTweet tweet=”Austerity is like the belief that draining blood from the patient will boost his recovery. This practice has fortunately been abandoned by the medical profession, but austerity continues in the economics profession. (Hilmar Hilmarsson)” quote=”Austerity is like the belief that draining blood from the patient will boost his recovery. This practice has fortunately been […]
Exit, Brexit, Voice And Loyalty
When thinking about the state of affairs in Europe, including post-crisis developments and Brexit, Albert Hirschman’s classic book Exit, Voice and Loyalty comes to mind. Hirschman noted two ways in which customers can respond to a firm´s deteriorating performance: switch to another product, or complain to management. Thus, they can exit or they can exercise […]
Small States Under Pressure
It is not always easy to be a small state in a global world. Many small states seek shelter, some by building alliances with larger states, others by joining international organizations such as the European Union. A shelter can be political, military as well as economic. The Nordic and the Baltic States have all sought […]
Baltic Austerity And Euro Area Contagion
I lived in Riga, the Latvian capital, from 1999 to 2003 just before the Baltic States became European Union member states in 2004. EU membership was to be a ticket to prosperity, and along with NATO membership, provide security. There was optimism that the Baltics would catch up with the richer EU15 countries and perhaps […]