The Baltic growth model: Balanced growth under the EMU playbook
Year: 2025
Type: article
Abstract: This article analyses the growth model (GM) of the Baltic States. Contrary to prevailing accounts in the literature, it argues that following the GFC, the Baltic States transitioned to a balanced GM. While austerity facilitated adjustment during the crisis, the subsequent balanced growth path was conditioned by an increasing wage share, a broad distribution of wage gains across both sheltered and exposed sectors, consumption growth, and robust export performance despite the rising real effective exchange rate. The paper identifies Lithuania as the most clear-cut case of balanced growth over the period 2010–22. Overall, the outcome of the Economic and Monetary Union’s macroeconomic governance regime depends on the institutional features of the economy and may not necessarily result in purely export-led growth. Furthermore, balanced GMs can emerge without strong wage coordination but can be supported by alternative configurations, with labour market flexibility playing a prominent role in the Baltics.
Source: Competition & Change
Author: Simonas Algirdas Spurga
Institution: Vilnius University
Language: English
Topic: Economic Theory and Policy
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $3,650
OpenAlex ID: W4409571730