Revisiting the Latvian and Greek Financial Crises: The Benefits of Front-Loading Fiscal Adjustment

This paper discusses why Greece has done so poorly in comparison with all other European Union countries since the onslaught of the global financial crisis in 2008. To show what was wrong with its fiscal adjustment, this paper compares Greece with the other European Union country that was hit be the most severe fiscal crisis, namely Latvia. The conclusion is that front-loaded fiscal adjustment works much better. Greek economic policy has been a popular topic among opinion writers, notably Nobel Prize winner and New York Times columnist Paul Krugman, who claimed that Greece suffered from austerity. Because of his prominence in the international public debate, I shall scrutinize his arguments on the Greek crisis. The paper also examines what policy the International Monetary Fund has pursued with regard to Greece, and how its views have been influenced by the debate and Greek economic developments. Finally, the paper assesses what lessons can be drawn from the contrasting experiences of Latvia and Greece. The conclusion is that a fiscal adjustment should be sufficient to resolve the crisis to restore confidence and that it should be as front-loaded as is practically and politically possible

The role of governance in realising the transition towards sustainable societies

It is widely known that governance is central to the successful implementation of sustainable development policies and measures. Yet, there is a paucity of research which explore the links between governance and sustainability. This paper attempts to address this research need by providing an analysis of the role of governance in enabling – and to some extent – fostering a transition towards sustainable societies. A set of indicators for assessing the capacity for and willingness and commitment to transition to a more sustainable society is presented, enabling identification of direction of change. This paper presents the results of a study, in the context of which sustainability governance has been comparatively investigated in a sample of European countries with, by methodological purpose, very different economic, environmental, political and social conditions (Denmark, Finland, Germany, Latvia, Lithuania and Poland). Lessons learnt and examples of good practice – which may be replicable elsewhere-are outlined. For instance, it is discussed that limited knowledge about sustainable development amongst municipal development planners and decision-makers, deficiencies in policy integration, intersectoral cooperation, municipality and stakeholder cooperation and urban management practices are major reasons for weak governance practices in sustainable development. Furthermore, some recommendations on the role of sustainability governance are made, so as to allow the integration of the principles of governance into sustainability practice and hence provide a more general basis upon which a transition towards sustainable societies may become a reality in different types of European countries and societies. The scientific value of this paper lies in identifying opportunities for integrating principles of governance into sustainability practice, as well as outlining the basis for sustainability transitions, providing a general picture of required policy measures. The paper offers a unique comparative analysis of sustainability governance in the Baltic Sea countries, outlining some of the challenges in sustainability governance in the Baltic Sea region