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The Choice of Reforms and Economic System in the Baltic States

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  • Karsten Staehr

    (Tallinn University of Technology
    Eesti Pank
    Tallinn University of Technology)

Abstract

This paper discusses the reforms that introduced market-based economies in the three Baltic states and seeks to identify particularities defining the resulting economic system. The reforms were rapid and broadly based and involved particular measures such as currency boards, free international trade, flat taxes and funded pension systems. The result was liberal-market economic systems with more emphasis on private enterprise, high-powered incentives and small governments than in most other post-communist countries. The unique choice of reforms may be seen as paradoxical given the proximity of the Baltic states to the Nordic welfare states. The choice may partly be explained by the initial economic and structural conditions of the countries, but the democratic and political dynamics as well as the preferences and values of the public are arguably of greater importance.

Suggested Citation

  • Karsten Staehr, 2017. "The Choice of Reforms and Economic System in the Baltic States," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 59(4), pages 498-519, December.
    • Handle: RePEc:pal:compes:v:59:y:2017:i:4:d:10.1057_s41294-017-0037-1
    DOI: 10.1057/s41294-017-0037-1
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    Cited by:

    1. Levenko, Natalia & Staehr, Karsten, 2023. "Self-reported tax compliance in post-transition Estonia," Economic Systems, Elsevier, vol. 47(3).

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    More about this item

    Keywords

    transition; economic reforms; institutions; comparative economic systems; political economy;
    All these keywords.

    JEL classification:

    • P17 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Performance and Prospects
    • P21 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Planning, Coordination, and Reform
    • P36 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty

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