Managing Reform: How Can the Baltic States as Aid Donors Best Share their Transition Experience with Less Advanced Economies and what Lessons Can they Learn from the International Development Programs of the Nordic Countries?

In spite of the global economic and financial crisis the Baltic States continue with their transition. According to the World Bank, Estonia and Latvia already are high income countries and Lithuania is an upper middle income country. All the Baltic States are members of key multilateral development institutions and have also established their bilateral development programs. Currently they are assisting and sharing their transition experience with countries further to the south and the east, including Belarus, Georgia, Moldova, Ukraine, etc. This article argues that small states can play an important role in economic development and the Baltic States can be important contributors since they have recent and relevant transition experience to share if they engage in policy dialogue with countries that are less advanced in their transition.Small states, bilateral and multilateral development cooperation, budget support, policy dialogue, international financial institutions (IFIs).

WHAT ARE THE ECONOMIC JUSTIFICATIONS FOR THE EXISTENCE OF EXPORT CREDIT AGENCIES AND HOW CAN THEY FACILITATE CROSS BORDER TRADE TO EMERGING MARKET ECONOMIES?

Export Credit Agencies (ECAs) have played an important role in cushioning the downturn in cross border trade during the currenteconomic and financial crisis. This article discusses the role of ECAs in facilitating cross border trade to emerging markets as wellas the economic rationale for the existence of such agencies. It also demonstrates how selected risk mitigation instruments of ECAs,namely: (i) buyer credit guarantee, (ii) supplier credit guarantees and (iii) export loans have been applied in practice. Finally casesare presented that highlight how companies have used the service of ECAs, for example, to obtain better terms, including longer termloans and/or lower interest rates.KEY WORDS: Cross border trade, emerging markets, financial crisis, export credit agencies (ECAs), commercial and non-commercialrisks, and risk mitigation instruments

Iceland’s language technology: policy versus practice

Iceland‟s language policies are purist and protectionist, aiming to maintain the grammatical system and basic vocabulary of Icelandic as it has been for a thousand years. Corpus planning plays a major role in keepin

SHOULD ICELAND SEEK EUROPEN UNION AND EURO AREA MEMBERSHIP?

Iceland is a small, resource rich country in Europe that is highly dependent on foreign trade. According to the World Bank classifications, Iceland is a high income economy, but with a population of a little bit more than 300 thousand inhabitants, is the smallest economy within the Organization for Economic Co-operation and Development (OECD). Iceland is highly dependent on foreign trade, especially on trade with the European Union, where economic and political integration is evolving and the question about the most feasible level of participation is a future challenge for the country. Iceland is a member of the European Free Trade Association (EFTA), the European Economic Area (EEA) and the Schengen area, and the European Union (EU) candidate country until recently, when its government decided to withdraw its EU membership application. Currently, the EEA agreement ensures Iceland access to the EU common market. The question remains, what is the most feasible arrangement for Iceland’s prosperity in the long term? Should it continue to rely on the current arrangement? Should it seek the EU membership in the future and, perhaps, subsequently become part of the Euro Area? What are the possible benefits and disadvantages for Iceland joining the EU and the Euro Area?KEYWORDS: economic integration, small states, Iceland, global crisis, economic policy.JEL CODES: F15, H12, E6DOI: http://dx.doi.org/10.15181/rfds.v21i1.140

FUNDING GEOTHERMAL PROJECTS: THE ROLE OF INTERNATIONAL FINANIAL INSTITUTIONS AND THE ABSENCE OF AN INTERNATIONAL REGIME FOR INVESTMENT

As the global economy grows, so does the demand for energy. Investment in clean energy projects, including geothermal, is increasingly important to help meet these growing energy needs. Clean energy projects are also important for environmental reasons and as part of the battle against climate change. Many clean energy sources in the world are located in developing countries, including emerging market economies. Investors in developing countries are normally faced with higher risks than those investing in high income developed economies. Higher risks in turn reduce capital flows to developing countries. This is particularly true during times of economic and financial crisis. At the same time energy projects tend to be large and capital intensive with long repayment periods. Energy projects also often require partnership between the public and private sectors i.e. public private partnerships (PPPs). Efficient allocation of risks among the different partners in PPPs is important for success, generally results in more profitable projects, and is more likely to benefit all parties involved. This article discusses public private partnerships in the energy sector in developing countries, characteristics of developing countries, the risk faced by investors, the absence of an international regime for investment, and risk mitigation instruments offered by international financial institutions to manage risks. KEYWORDS: Clean and renewable energy investments, geothermal projects, developing and emerging market economies, risks and risk mitigation instrument.JEL CODES: F30, G20, G32, O22, Q20, Q4

CAPITAL INTENSIVE CLEAN ENERGY PROJECTS: SOME COSTS, BENEFITS AND CHALLENGES OF USING PUBLIC-PRIVATE PARTNERSHIPS

Geothermal and hydropower projects tend to be capital intensive and with long repayment periods. These projects can be challenging, especially in developing and emerging countries in transition often characterized by changing and unpredictable political and business environments. Developing and emerging countries are eligible for support from international financial institutions (IFIs) such as the World Bank Group and regional development banks and can also receive assistance from bilateral donor institutions. PPPs enable pooling of public, private and donor funds for clean energy investment. A well designed PPP can be a venue for scaling up funding for clean energy investment internationally. However, little point exists in forming PPPs if, for example, the private sector partner captures most or all the benefits, or if the government keeps changing the rules of the game resulting in a non-viable project. The focus of this article is on PPPs, potential benefits and challenges for host governments and various partners, including the private sector, bilateral donors, and multilateral institutions such as IFIs. When disputes occur between the private sector and host governments, IFIs can potentially play an important role in resolving disputes and help ensure the fair sharing of the risks and the rewards of the PPP for all the parties involved. The objective of this article is to review some recent theoretical research recently done on PPP, potential benefits as well as some challenges using this model in developing and emerging countries.KEYWORDS: hydro- and geothermal energy projects, public-private partnerships, international and national financial institutions

HE COLLAPSE OF THE ICELANDIC BANKING SYSTEM AND THE (DIS)HONEST AND/OR (IN)COMPETENT RESPONSE OF THE INTERNATIONAL COMMUNITY

The 2008 global economic and financial crisis hit hard in Iceland. During the crisis its three largest banks all collapsed in just a few days with severe consequences for the economy and the people. Prior to the crisis, Iceland, a high income OECD country, had experienced strong growth and unprecedented expansion in overseas investments and activities, especially in the financial sector. This article focuses on the actions of the international community when the Icelandic authorities, during a period of great uncertainty, sought assistance to protect the Icelandic economy before the banking system fell. The methodology used in this article is the case study method. Compared to other research methods, a case study enables the researcher to examine the issues involved in greater depth. Arguably, the governments of the Netherlands and the UK tried to fake reality by suggesting that the Icelandic government, i.e. Icelandic taxpayers, should be made responsible for paying the debts of private banks. The EFTA Court ruling confirms that Iceland did not have this responsibility. In retrospect one can argue that the EU showed dishonesty by supporting the Netherlands and the UK in demanding a sovereign guarantee for failed private banks. The Icelandic banking expansion exposed weaknesses in EU integration and may also confirm a certain incompetence within the EU in designing an EU-wide banking system.  KEYWORDS: Economic and financial crisis, economic policy, international expansion of firms, risk management

ICELAND AND LATVIA: THE ECONOMIC AND THE SOCIAL CRISIS

The 2008 global economic and financial crisis hit hard in Iceland and Latvia. Economic developments prior to the crisis, as well as response to the crisis were, however, different in these two countries, yielding different results. Both countries received assistance from the International Monetary Fund (IMF) during the crisis and the IMF has labeled their reform programs as success stories. This article reviews and evaluates the post crisis situation in Iceland and Latvia, both in terms economic performance, as well as social progress. It also discusses how other countries, as well a multilateral institutions, may have influenced the reform programs in Iceland and Latvia.KEY WORDS: Small states, Latvia and Iceland, global crisis, economic policy, privatization.JEL CODES: H12, E63, L33DOI: http://dx.doi.org/10.15181/rfds.v14i3.86

THE BALTIC STATES AND THE CHALLENGE OF BEING A SMALL DONOR

This article will take stock of the current situation of the development programs in the Baltic States, including main partner countries and priority sectors and suggest new venues to expand their engagement as their aid programs become larger. This will include discussion about the current project approach and possibilities to engage in budget support. The article is based on a review of theoretical literature, interviews, secondary data and the author’s experience as a staff member of the World Bank Group for 12 years in three continents. KEYWORDS: The Baltic States, bilateral development cooperation, multilateral development cooperation, budget support, policy dialogue, international financial institutions (IFIs)