Proposal preview

Economic interactions between the Baltic Sea Region and other parts of the world: Economic Relations from pre-WWI to the Present

The Baltic Sea Region has long been a hub of international activity and exchange, dating back at least to the medieval Hanseatic League. Today it is seen as one of the most dynamic regions in Europe. After the First World War there were many economic actors around the Baltic Sea: large states like Germany, Poland, as well as small national states like Sweden, Denmark, Finland, Estonia, Latvia and Lithuania. The countries were different in size and in internal regimes. They had a variety of economic contacts with each other and the rest of the world: trade, foreign direct investments, and debt relations, migration of entrepreneurs, merchants, professionals and workers.
But what were the economic relations and interactions between the Baltic Sea Region countries and other parts of the world? In particular, what were the economic and political interactions of the Baltic Sea Region with countries such as the USA and Russia or regions like South America and Africa?
We invite papers to discuss the economic and political interaction between the Baltic Sea Region and other parts of the world during the decades before WWI, the interwar years, the Soviet period (particularly for Estonia, Latvia and Lithuania, as well as Poland) and from the collapse of the USSR to the present.
Papers should deal with any or some of the following:
– external trade
– foreign direct investments
– financial and debt relations
– diffusion of technologies
– diffusion industrial management practices
– institutions created to favour economic relations with the rest of world
– trade and other government policies to foster Baltic Sea connections with the rest of the world
– other issues related to the topic.

Organizer(s)

  • Viesturs P. Karnups University of Latvia viesturspauls@gmail.com Latvia

Session members

  • Sofya Salomatina, Moscow Lomonosov State University
  • Mikael Olsson, Uppsala University
  • Mikael Lönnborg, Uppsala University
  • Hans Jörgensen, Umeå Universitet
  • Piotr Franaszek, Jagiellonian University
  • Jonas Ljungberg, Lund University
  • Peter Hedberg, Uppsala University
  • Lars Karlsson, Uppsala University
  • Ayşe F. Şahinkuşu, Bozok University

Discussant(s)

Papers

Panel abstract

The Baltic Sea Region has long been a hub of international activity and exchange, dating back at least to the medieval Hanseatic League. Today it is seen as one of the most dynamic regions in Europe. However, what were the economic relations and interactions between the Baltic Sea Region countries and other parts of the world? In particular, what were the economic and political interactions of the Baltic Sea Region with countries such as the USA and Russia or other world regions? The session will discuss the economic and political interaction between the Baltic Sea Region and other parts of the world during the decades before WWI, the interwar years, the Soviet period (particularly for Estonia, Latvia and Lithuania, as well as Poland) and from the collapse of the USSR to the present.

1st half

The banking market of the Baltic Sea regions of the Russian Empire in the 1870s — 1910s: between the West and the East

Sofya Salomatina

This paper studies the banking of the Western regions of the Russian Empire, which mostly gravitated around the Baltic Sea, except for the Grand Duchy of Finland. The Western regions included the Baltic, Polish, Lithuanian, Byelorussian and Russian North-Western provinces. The Baltic provinces had a specific and relatively developed banking system in comparison with other parts of the Empire. The Western regions had close ties with the Empire’s leading financial markets in St. Petersburg and Moscow. Leading Russian banks actively established branches in the Western regions, on trade routes to Europe via railways and seaports. The Western regions had always been the regions of capital inflow, which can be revealed statistically, and this indicates the links with European markets. It was apparently the reason for the fast growth of Polish banking in the 1880s, at the time of a severe banking depression in Central Russia.

This paper studies the banking of the Western regions of the Russian Empire, which mostly gravitated around the Baltic Sea, except for the Grand Duchy of Finland. The Western regions included the Baltic, Polish, Lithuanian, Byelorussian and Russian North-Western provinces. The Baltic provinces had a specific and relatively developed banking system in comparison with other parts of the Empire. The Western regions had close ties with the Empire’s leading financial markets in St. Petersburg and Moscow. Leading Russian banks actively established branches in the Western regions, on trade routes to Europe via railways and seaports. The Western regions had always been the regions of capital inflow, which can be revealed statistically, and this indicates the links with European markets. It was apparently the reason for the fast growth of Polish banking in the 1880s, at the time of a severe banking depression in Central Russia.

Latvia-USA Economic Relations 1918-1940

Viesturs Pauls Karnups

The US hesitated in recognising Latvia de iure. In economic terms, the main problem was war debts. The USA recognised the Republic of Latvia de iure on 28 July 1922.In the interwar years, Latvian and USA economic relations was mainly confined to foreign trade and investment. Latvia’s main exports to the USA were canned fish including "Šprotes", chocolates and candy, cellulose, hides and furs, plywood, timber and timber products (including plywood), and peat and peat products. Latvia’s main imports from the USA were cereals; raw cotton; automobiles and parts; industrial and agricultural machinery; petroleum products and, surprisingly, hides and furs. USA investments in Latvia were mainly in the banking sector. Most the Bank of Latvia’s gold reserve was held overseas. Latvian government and Central bank deposits in U.S. banks were identified, transferred to the U.S. central bank (Federal Reserve System), and frozen in 1940.

The US hesitated in recognising Latvia de iure. In economic terms, the main problem was war debts. The USA recognised the Republic of Latvia de iure on 28 July 1922.In the interwar years, Latvian and USA economic relations was mainly confined to foreign trade and investment. Latvia’s main exports to the USA were canned fish including "Šprotes", chocolates and candy, cellulose, hides and furs, plywood, timber and timber products (including plywood), and peat and peat products. Latvia’s main imports from the USA were cereals; raw cotton; automobiles and parts; industrial and agricultural machinery; petroleum products and, surprisingly, hides and furs. USA investments in Latvia were mainly in the banking sector. Most the Bank of Latvia’s gold reserve was held overseas. Latvian government and Central bank deposits in U.S. banks were identified, transferred to the U.S. central bank (Federal Reserve System), and frozen in 1940.

The Impact of the Russian Revolution on the Baltic Sea Trade

Lars Karlsson, Peter Hedberg

This paper deals with the impact of the great political upheavals of the early 20th century on European trade and economic integration. Using a high-definition fixed effects gravity model we attempt to control for the myriad of factors that determined bilateral trade flows during the inter-war period and provide an estimate for the impact of the Russian Revolution and its aftermath on Russian/USSR trade with the Baltic Sea region. We find that the Russian revolution(s) caused a significant increase in Russian imports from the Baltic Sea region, while the ensuing civil war caused a general collapse in Russian-Baltic trade. The formation of the USSR in 1923 caused this shift in trade patterns to be made permanent. The loss of the Russian market did not increase the integration within the remaining Baltic Sea region. Rather, trade with other European and non-European states seems to have been substituted for the Russian-Baltic trade.

This paper deals with the impact of the great political upheavals of the early 20th century on European trade and economic integration. Using a high-definition fixed effects gravity model we attempt to control for the myriad of factors that determined bilateral trade flows during the inter-war period and provide an estimate for the impact of the Russian Revolution and its aftermath on Russian/USSR trade with the Baltic Sea region. We find that the Russian revolution(s) caused a significant increase in Russian imports from the Baltic Sea region, while the ensuing civil war caused a general collapse in Russian-Baltic trade. The formation of the USSR in 1923 caused this shift in trade patterns to be made permanent. The loss of the Russian market did not increase the integration within the remaining Baltic Sea region. Rather, trade with other European and non-European states seems to have been substituted for the Russian-Baltic trade.

A Research On The History Of Economic Relationships Between The Baltic Sea Region And Turkey In The Light Of Archival Documents

Ayşe Feyza Şahinkuşu

Founded in 1923, one of the main objectives of the Republic of Turkey was to ensure the development of international economic relations. This development began with the treaties of amity signed with many countries. During this period, the agreements made with the countries in the Baltic region with Turkey, led to the strengthening of international economic relations between the two regions. These relations restored and accelerated in after the World War II and the USSR's disintegration. The main objective of the study is to draw a general framework of the economic and commercial relations that were taking place between Turkey and the entire Baltic countries in the region. The research is carried out through the archival documents of the Turkish Republic Prime Ministry State Archives.

Founded in 1923, one of the main objectives of the Republic of Turkey was to ensure the development of international economic relations. This development began with the treaties of amity signed with many countries. During this period, the agreements made with the countries in the Baltic region with Turkey, led to the strengthening of international economic relations between the two regions. These relations restored and accelerated in after the World War II and the USSR's disintegration. The main objective of the study is to draw a general framework of the economic and commercial relations that were taking place between Turkey and the entire Baltic countries in the region. The research is carried out through the archival documents of the Turkish Republic Prime Ministry State Archives.

2nd half

Regional integration in northern Europe: On the role of trade and FDI in the Baltic Sea Region, 1990-2015

Mikael Olsson, Mikael Lönnborg

The paper approaches the economic underpinnings for the Baltic Sea Region by analysing the developments with regard to trade and FDI in the quarter of a century that has passed since the fall of the communist regimes that divided the European continent. The paper offers a novel use and presentation of existing data on trade & FDI combined with insights from case studies; the main question asked is whether economic developments are in congruence with the notion of building an integrated region? In short, does it make economic sense to talk about a Baltic Sea Region or is the east-west divide in the Nordic-Baltic hemisphere still omnipresent? The main part of the paper is where the geographical and sectorial distribution of economic flows are analysed. In the conclusions, lessons learned with regard to regional integration are summarised and implications for the prevailing view on FDI and privatisation are discussed.

The paper approaches the economic underpinnings for the Baltic Sea Region by analysing the developments with regard to trade and FDI in the quarter of a century that has passed since the fall of the communist regimes that divided the European continent. The paper offers a novel use and presentation of existing data on trade & FDI combined with insights from case studies; the main question asked is whether economic developments are in congruence with the notion of building an integrated region? In short, does it make economic sense to talk about a Baltic Sea Region or is the east-west divide in the Nordic-Baltic hemisphere still omnipresent? The main part of the paper is where the geographical and sectorial distribution of economic flows are analysed. In the conclusions, lessons learned with regard to regional integration are summarised and implications for the prevailing view on FDI and privatisation are discussed.

Economic relations between Poland and the United States in the second half of the 20th century

Piotr Franaszek

After the Second World War, the Polish economy was devastated as a result of warfare and German occupation. The first trade relations between Poland and the United States after the Second World War date back to July 1945, that simultaneously granted the most favoured nation status (MFN) to Poland. In 1952 Poland lost its most favoured nation status and the US imposed even twice as high tariff rates on the Polish exports. After the political changes that took place in Poland in autumn 1956 the improvement in economic relations was accompanied by increased imports of modern technology and enabling the purchase of a considerable number of licences. After the communist authorities’ decision on introducing the martial law on 13th December 1981 the US president Ronald Reagan imposed economic sanctions on Poland. Only in the last years of the 1980s, an increase in the US trade with Poland was observed.

After the Second World War, the Polish economy was devastated as a result of warfare and German occupation. The first trade relations between Poland and the United States after the Second World War date back to July 1945, that simultaneously granted the most favoured nation status (MFN) to Poland. In 1952 Poland lost its most favoured nation status and the US imposed even twice as high tariff rates on the Polish exports. After the political changes that took place in Poland in autumn 1956 the improvement in economic relations was accompanied by increased imports of modern technology and enabling the purchase of a considerable number of licences. After the communist authorities’ decision on introducing the martial law on 13th December 1981 the US president Ronald Reagan imposed economic sanctions on Poland. Only in the last years of the 1980s, an increase in the US trade with Poland was observed.

Swedish Economic Intelligence: The East Economic Bureau during the Cold War

Hans Jörgensen

Based on recently opened, previously classified archives, this paper investigates the development and actions of the EEB (the East Economic Bureau) during the Cold War. The EEB was a secret Business-State cooperation working with economic intelligence activities in the emerging planned economies. Cooperation between the Defense Staff and business, however, began during the final years of World War II when the aim was to estimate the economic capacity of the belligerent countries. Along with organizational changes, the information gathering shifted towards the CMEA-area in the 1950s and the EEB could act more or less in full secrecy up to the early 1970s. In fact, parts of the structure remained until 1989. The paper therefore explores – from the perspective of small state theory - the organizational development of the EEB, its organizational precursors, networks, information gathering as well as the selective dissemination of classified judgments/reports.

Based on recently opened, previously classified archives, this paper investigates the development and actions of the EEB (the East Economic Bureau) during the Cold War. The EEB was a secret Business-State cooperation working with economic intelligence activities in the emerging planned economies. Cooperation between the Defense Staff and business, however, began during the final years of World War II when the aim was to estimate the economic capacity of the belligerent countries. Along with organizational changes, the information gathering shifted towards the CMEA-area in the 1950s and the EEB could act more or less in full secrecy up to the early 1970s. In fact, parts of the structure remained until 1989. The paper therefore explores – from the perspective of small state theory - the organizational development of the EEB, its organizational precursors, networks, information gathering as well as the selective dissemination of classified judgments/reports.

Economic integration and exchange rate arrangements in the post-soviet period. The Baltic states in comparative perspective

Jonas Ljungberg

After the collapse of the Soviet Union, the three Baltic states and Poland have been rapidly catching-up with Western Europe. The Great Recession has been a great setback for the former, while less so for Poland. A difference is the monetary policy: the Polish zloty depreciated in the critical moment of the crisis, while currency boards with the aim of joining the euro bestowed appreciation for the Baltics and Finland. Contrary to the purpose, monetary integration has not fostered integration in trade, and the share of the Eurozone in Baltic trade has at best stagnated. A comparison with other countries in the Baltic Sea region suggests that the euro provides “the golden fetters” of our time. Emigration, also a kind of integration, has become a safety valve with severe social and economic consequences for the Baltic states.

After the collapse of the Soviet Union, the three Baltic states and Poland have been rapidly catching-up with Western Europe. The Great Recession has been a great setback for the former, while less so for Poland. A difference is the monetary policy: the Polish zloty depreciated in the critical moment of the crisis, while currency boards with the aim of joining the euro bestowed appreciation for the Baltics and Finland. Contrary to the purpose, monetary integration has not fostered integration in trade, and the share of the Eurozone in Baltic trade has at best stagnated. A comparison with other countries in the Baltic Sea region suggests that the euro provides “the golden fetters” of our time. Emigration, also a kind of integration, has become a safety valve with severe social and economic consequences for the Baltic states.