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Economic Evolution of the Baltic Tigers: Growth through Economic Complexity and Foreign Direct Investment

Reynet, Layz LU (2019) EKHS22 20191
Department of Economic History
Abstract
This research outlines the evolution of the manufacturing and industrial export structure of countries, Estonia, Lithuania, and Latvia since 1992 within the framework of Economic Complexity and the Product Space. The research reveals a relatively low level of specialization in the countries’ export structures and identifies a dual structure within the economy due to the foreign ownership of firms. We relate how foreign direct investment has been essential in the growth of the Baltics, but such dependence has left a vulnerable economic foundation and weakened industrial sector. The framework was used as a tool for identifying some potential sectors that could be developed with the countries’ current domestic capability base and could... (More)
This research outlines the evolution of the manufacturing and industrial export structure of countries, Estonia, Lithuania, and Latvia since 1992 within the framework of Economic Complexity and the Product Space. The research reveals a relatively low level of specialization in the countries’ export structures and identifies a dual structure within the economy due to the foreign ownership of firms. We relate how foreign direct investment has been essential in the growth of the Baltics, but such dependence has left a vulnerable economic foundation and weakened industrial sector. The framework was used as a tool for identifying some potential sectors that could be developed with the countries’ current domestic capability base and could increase their complexity levels for future growth. The paper compares the Baltic growth model to the East Asian growth model and highlights the differences between service-oriented growth and export-led growth, suggesting that the Baltics take lessons from the East Asian Tigers in that exports and diversification are key to sustained growth. This will be essential in order for them to fully converge to European Union levels and avoid getting stuck in a middle-income trap, as is a possibility for them given their recent economic slowdown. (Less)
Please use this url to cite or link to this publication:
author
Reynet, Layz LU
supervisor
organization
course
EKHS22 20191
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Economic Development, Economic Complexity, Baltic Region, Export Diversification, Foreign Direct Investment, Human Capital, Middle Income Trap
language
English
id
8987066
date added to LUP
2019-08-22 08:29:33
date last changed
2019-08-22 08:29:33
@misc{8987066,
  abstract     = {{This research outlines the evolution of the manufacturing and industrial export structure of countries, Estonia, Lithuania, and Latvia since 1992 within the framework of Economic Complexity and the Product Space. The research reveals a relatively low level of specialization in the countries’ export structures and identifies a dual structure within the economy due to the foreign ownership of firms. We relate how foreign direct investment has been essential in the growth of the Baltics, but such dependence has left a vulnerable economic foundation and weakened industrial sector. The framework was used as a tool for identifying some potential sectors that could be developed with the countries’ current domestic capability base and could increase their complexity levels for future growth. The paper compares the Baltic growth model to the East Asian growth model and highlights the differences between service-oriented growth and export-led growth, suggesting that the Baltics take lessons from the East Asian Tigers in that exports and diversification are key to sustained growth. This will be essential in order for them to fully converge to European Union levels and avoid getting stuck in a middle-income trap, as is a possibility for them given their recent economic slowdown.}},
  author       = {{Reynet, Layz}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Economic Evolution of the Baltic Tigers: Growth through Economic Complexity and Foreign Direct Investment}},
  year         = {{2019}},
}