Broad interpretation However there is another way of interpreting SSWM. In contrast to the ‘narrow’ version, the ‘broader’ interpretation refers not to specific causal connections outlined above, but rather to a more general way of approaching the study of political economy in particular and politics in general. What I mean by ‘broad’ interpretation in this article is the position to take into account size (smallness) as a variable, analyse ideas and history, as well as recognize the importance of political legitimacy in affecting economic performance. Note that only the first item focuses on differentiating small states from larger ones. History, ideas and political legitimacy are important regardless of state size. To begin with, one of the main lessons of SSWM is that size is important and should be treated as a variable rather than a constant. In ‘Small States and Small States Revisited’, Katzenstein (2003) briefly explains his motivation for writing SSWM. SSWM was a follow-up on an earlier research project – Between Power and Plenty (Katzenstein 1977) – and an attempt to address some of the latter’s drawbacks. One of the chief ones was inattention to size as an explanatory variable. Smallness and vulnerability – Katzenstein maintains – have important and far-reaching consequences for the development and functioning of small countries’ politico-economic regimes. Of course, the ‘narrow’ interpretation also focuses on the effects of smallness, but it formulates a specific prediction on its role. By contrast, the ‘broad’ version simply states that size is significant, but the way it affects any country’s political economy and politics is contingent. The second implication of SSWM is the significance of history. Specifically, ‘in the small European states (…) a tradition of accomodative politics dating back beyond the nineteenth century facilitated the political reorientation that took place in the 1930s and 1940s’ (Katzenstein 1985, p. 35). In SSWM, Katzenstein claims that history is important, which means that there are powerful continuities to a given country’s economic and political
References Austers, A. (2014) ‘Latvia’s Controversial “Success Story”,’ in Bukovskis, K. (ed) (2014) The Politics of Economic Sustainability: Baltic and Visegrad Responses to the European Economic Crisis (Riga, Latvian Institute of International Affairs). Abdelal, R. (2001) National Purpose in the World Economy: Post-Soviet States in Comparative Perspective (Ithaca, Cornell University Press). Berg, E., & P. Ehin. (eds) (2009) Identity and foreign policy: Baltic-Russian relations and European integration (Burlington: Ashgate Publishing). Blyth, M. (2009) ‘An Approach to Comparative Analysis or a Subfield within a Subfield? Political Economy,’ in Lichbach, M. I. & Zuckerman, A. S. (eds) (2009) Comparative Politics: Rationality, Culture, and Structure (Cambridge, Cambridge University Press), pp. 193-219. Bohle, D. & B. Greskovits (2007) ‘Neoliberalism, embedded neoliberalism and neocorporatism: Towards transnational capitalism in Central-Eastern Europe,’ West European Politics 30, 3, pp. 443–466. Bohle, D. & B. Greskovits (2009) ‘East-Central Europe’s Quandary,’ Journal of Democracy, 20, 4, pp. 50-63. Carley, M. (2009) ‘Trade union membership 2003-2008,’ European industrial relations observatory online, available at:
Hardiman, N., P. Murphy & O. Burke (2008) ‘The Politics of Economic Adjustment in a Liberal Market Economy: The Social Compensation Hypothesis Revisited,’ Irish Political Studies, 23, 4, pp. 599-626. Ingebritsen, C. (2010) ‘Katzenstein’s Legacy 25 Years After: Small States in World Markets,’ European Political Science, 9, 3, pp. 359–364. Jones, E. (2008) Economic adjustment and political transformation in small states (Oxford, Oxford University Press). Kallaste, E. & C. Woolfson (2013) ‘Negotiated Responses to the Crisis in the Baltic countries,’ Transfer: European Review of Labour and Research, 19, 2, pp. 253-266. Katzenstein, P. J. (2003) ‘Small States and Small States Revisited,’ New Political Economy, 8, 1, pp. 9–30. Katzenstein, P. J. (1985) Small states in world markets: industrial policy in Europe (Ithaca: Cornell University Press). Katzenstein, P. J. (ed.) (1977) Between power and plenty: Foreign economic policies of advanced industrial states (Madison, University of Wisconsin Press). Kuokštis, V. & R. Vilpišauskas (2010) ‘Economic Adjustment to the Crisis in the Baltic States in Comparative Perspective,’ Paper presented at 7th Pan-European International Relations Conference, Stockholm, Sweden, 9-11 September. Kuokštis, V. (2012) ‘Trust and Taxes: Estonian and Lithuanian Fiscal Performance During the Crisis,’ Paper presented at American Political Science Association Annual Meeting, 30 August – 2 September.
Lamoreaux, J. W. & D. Galbreath (2008) ‘The Baltic States as ‘Small States’: Negotiating the ‘East’ by Engaging the ‘West’,’ Journal of Baltic Studies, 39, 1, pp. 1-14. Mälksoo, M. (2006) ‘From Existential Politics Towards Normal Politics? The Baltic States in the Enlarged Europe,’ Security Dialogue, 37, 3, pp. 275-298. Masso, J., K. Espenberg, A. Masso, I. Mierina & K. Philips (2012) ‘Growing Inequalities and its Impacs in the Baltics,’ Country Report for the Baltic States Estonia, Latvia, Lithuania, available at: accessed 10 March 2014. Powell, E.N. & J.A. Tucker (2013), ‘Revisiting Electoral Volatility in Countries: New Data, New Results and New Approaches,’ British Journal of Political Science, 44, 1, pp. 123-147. Raudla, R. & R. Kattel (2011) ‘Why Did Estonia Choose Fiscal Retrenchment after the 2008 Crisis?’ Journal of Public Policy, 31, 2, pp. 163-186. Rodrik, D. (1998) ‘Why do more open economies have bigger governments?’ Journal of Political Economy, 106, 5, pp. 997-1032. Schwartz, H. (2010) ‘Small States in the Rear-view Mirror: Legitimacy in the Management of Economy and Society,’ European Political Science, 9, 4, 365-374. Thorhallsson, B. & R. Kattel (2012) ‘Neo-liberal Small States and Economic Crisis: Lessons for Democratic Corporatism,’ Journal of Baltic Studies, 44, 1, pp. 83-103. Torgler, B. (2003) ‘Tax Morale, Rule-Governed Behaviour and Trust,’ Constitutional Political Economy, 14, 2, pp. 119-140.
Visser, J. (2011) The ICTWSS Database: Database on Institutional Characteristics of Trade Unions, Wage Setting, State Intervention and Social Pacts in 34 Countries Between 1960 and 2007. Version 3. Amsterdam Institute for Advanced Labour Studies (AIAS), University of Amsterdam. Available at http://www.uva-aias.net/208. Table 1. Smallness and openness indicators for the three Baltic countries and the seven countries analysed in Katzenstein's SSWM Table 1. Smalness and openness indicators for the three Baltic countries and the seven countries analysed in Katzenstein’s SSWM GDP, in billions of euro (2012) Exports/GDP, in percentage (2012) Population, in thousands (2012) Volatility of growth, standard deviation of real GDP growth from 2002-2012 Estonia 17 91 1325 7.27 Latvia 22 62 2045 8.47 Lithuania 33 84 3004 6.95 Austria 307 57 8408 2.05 Belgium 376 86 11095 1.71 Denmark 245 55 5581 2.42 Netherlands 600 88 16730 2.14
Slovenia 25.0 0.89 1.24 26.6 EU average 29.1 0.48 1.95 NA Sources: Columns 1, 2 and 3: Eurostat; Column 4: Visser. Table 3. Trust in political institutions in the Baltic countries. Parliament Government Political parties Regional/local authorities Justice system Estonia 49 58 21 59 76 Latvia 11 15 4 40 48 Lithuania 8 15 6 24 48 All countries in Eurobarometer (average) 38 36 20 50 66 Percentage of people who tend to trust in a given institution in 2010 (for parliament and government) and 2011 (political parties, regional/local authorities and justice system). Sources: Masso, Espenberg, Masso, Mierina, Philips 2012, p. 92, based on Eurobarometer surveys. Figure 1. EU member states and selected other countries in terms of expenditure as percentage of GDP in 2012. Source: Eurostat.