Shifts in foreign trade, competitiveness and growth potential: from Baltics to "Bal-techs"?
ENThe collapse of socialism and the ensuing transition process have revealed the position of Estonia, Latvia and Lithuania in an international, economic perspective. Data presented in this paper suggest that the Baltics are competitive in sectors that generate little value-added as a result of their inferior level of technology relative to their trade partners mainly (OECD-Europe). This raises questions about the income levels attainable in these countries. The question with respect to future economic growth is whether there is any potential in the Baltic countries to increase the level of technology. This paper argues that the socialist past, especially the separation of research and development from production, is an important obstacle to technological progress in the Baltics. In order to integrate research and production, socialist institutions need to be transformed or abolished, while new ones have to be created. This will take considerable time and effort.
