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Abstract
This article explores the impact of international trade on private investment in the three post-Soviet Baltic states—Estonia, Latvia and Lithuania—by applying the business cycle synchronisation theory and highlighting the importance of big neighbours for small open economies. The study covers 1995–2015. The study shows that changes in the GDP growth of trading partners can have a greater effect on domestic private investment in small open economies than GDP changes in their own economies. The ongoing business cycle synchronisation between Russia and the Baltic countries means that the impact of Russia as a big neighbour remains an important issue for the latter.
Notes
1 Challenging Neighbours: Rethinking German and Dutch Economic Institutions, CPB Netherlands Bureau for Economic Policy Analysis (Berlin and Heidelberg, Springer-Verlag, 1997).
2 ‘Direction of Trade Statistics (DOTS)’, IMF, Citation2016, available at: http://data.imf.org/?sk =9d6028d4-f14a-464c-a2f2-59b2cd424b85&ss =1390030341854, accessed 15 January 2016.
3 ‘Aggregate National Accounts, SNA 2008 (or SNA 1993): Gross Domestic Product’, OECD National Accounts Statistics (database), 2016, available at: https://doi.org/10.1787/data-00001-en, accessed 18 January 2016.
4 The non-financial corporations sector comprises all private and public corporate enterprises that produce goods or provide non-financial services to the market.
5 EUROSTAT database, European Commission, available at: http://ec.europa.eu/eurostat/web/national-accounts/data/database, accessed 20 January 2016.
6 AMECO database, European Commission, available at: http://ec.europa.eu/economy_finance/ameco/user/serie/SelectSerie.cfm, accessed 20 January 2016.
Additional information
Notes on contributors
Lina Sineviciene
Lina Sineviciene, Associate Professor, School of Economics and Business, Kaunas University of Technology, Gedimino st. 50, LT-44239, Kaunas, Lithuania. Email: [email protected]
Rytis Krusinskas
Rytis Krusinskas, Professor, School of Economics and Business, Kaunas University of Technology, Gedimino st. 50, LT-44239, Kaunas, Lithuania. Email: [email protected]