Tiny Baltic economies filled niche roles unavailable to larger Southern European states

Evidence

The Baltic States are a quick commute away from the economies of Scandinavia, to whom they offer wage arbitrage and a deregulated, culturally proximate, low-tax business environment. Spain can’t do that. It’s too far away and, crucially, it’s too big to replicate the same trick. While Romania and Bulgaria are medium-sized, middle-income states, the Baltic states are tiny. The average Baltic state is about the same size as a New York City outer borough. They can survive in the cracks of the world economy in a way that large economies cannot. Can you imagine what would happen to political stability if 4 percent of Southern Europe’s labor market left their respective countries in a three-year period? Where would they all go to find work? Lithuania? — Mark Blyth, Austerity, 610

Categorization

• XREF: connects to: Baltic export-led recoveries partly relied on neighbors’ demand, not austerity itself — Mark Blyth, Austerity: The History of a Dangerous…, 609