What type of capitalism do the Baltic countries belong to?
This paper draws on the Varieties of Capitalism (VoC) approach to analyse the Baltic countries’ politico-economic regimes. The paper discusses the dominant treatment of the Baltic countries as liberal market economies (LMEs) in the literature, and while recognizing many affinities with the LME model, it emphasizes several substantial differences. As a result, a case is made for conceptualizing Baltic capitalism as a distinct variety that is neither LME nor CME. Furthermore, it is not a “hybrid” type, as it has its own logic, distinct institutional complementarities, and displays strong continuities over time. The paper takes into account not only the microeconomic dimension, but also its linkages with the Baltic macroeconomic arrangements. It argues that the functioning of this specific Baltic regime was one of the factors that allowed Estonia, Latvia and Lithuania to successfully implement an “internal devaluation” strategy during the Great Recession of 2008–10.