ABSTRACT
Investing in the transfer of knowledge is how nations and institutions grow their human capital. It occurs through education and training. Together, these processes have long been shown to provide payoffs that are far greater than the investments themselves (Lucas 1993; European Commission 2010a; Hanushek and Woessmann 2010). However, the recent deep recession of 2008-2010 forced the Baltic states, like most of the developed world, to reduce the overall amounts devoted to public services, including education, even as they tried to retain as closely as possible the same or somewhat greater percentage of Gross Domestic Product (GDP). As their economies improve, they are slowly bringing those funding percentages closer to the EU average.
