ABSTRACT
This chapter highlights the successes and failures of the Nordic countries and Baltic States, the lessons learned from their experience of the 2008/2009 economic crisis, and future challenges. The potential for Nordic-Baltic co-operation is discussed as these countries are linked via trade, investment and mobility of labour, in addition to a shared common history. The 2008/09 global economic and financial crisis was a serious setback for the Baltic States and their subsequent recovery has been difficult. The pre-crisis fixed exchange-rate policy and post-crisis adoption of the euro have been costly for the Baltic States. European Union membership, the determination of the Baltics to join the euro area, as well as interlinkages with the Scandinavian countries, especially financial sector interlinkages, has had profound effects on the Baltics. The Nordics have much higher private-sector debt than the Baltics, which continues to be a concern especially because of continental Nordic-Baltic banking interlinkages.
