Historical legacy

Of all the European post-Communist states, Latvia and the other two Baltic republics stand out with their unique economic history and legacy. They differ from other former Soviet republics because they have a living memory of a period of independence between 1920 and 1940, a period which is being used as a guide and a morale booster to overcome present problems. They differ from the Eastern European states because they were subject to a unified central economic plan directed from Moscow and had no economic autonomy or borders as did states such as Poland and Hungary.

During two decades of independence the three small Baltic states established economic stability and prosperity in spite of the tremendously wrenching dislocation of World War I and the equally debilitating impact of the Great Depression of the early 1930s. The Baltic states coped on their own without any foreign aid and managed to accumulate very little debt. The relatively large quantities of gold deposited in Western countries (as well as appropriated by the USSR immediately after its occupation of the Baltic states) is only one index of the success of economic policy during the independence period. This Western gold, moreover, has become the foundation for current Baltic monetary stability.

The period of independence has provided another reference point, especially for Estonia and Latvia.