Baltic States in World Markets: Does Katzenstein’s Framework Still Hold?

Abstract

Small states, argued Peter Katzenstein a quarter of a century ago, were different. Faced with the fluctuations of world markets, they adopt democratic corporatism and domestic compensation, thus ensuring political legitimacy and successful economic adjustment. The Baltic countries are an interesting case study for this framework, because in many ways they are “smaller” than the seven countries analyzed by Katzenstein. This article finds that, on a broader level, Katzenstein’s framework is very helpful in highlighting the key developments in the Baltic countries. On the other hand, the specific causal mechanism that can be drawn from this framework running from smallness, to democratic corporatism, to political legitimacy, as well as domestic compensation, has not developed in the Baltics.