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This essay explores how the Baltic republics responded to the crisis of 2008-2011.We argue that while there are significant differences in how the Baltic economies responded to the crisis, these responses not only remain within the neo-liberal policy paradigm characteristic of the region from the early 1990s, but that the crisis radicalised Baltic economies and particularly their fiscal stance. We show that there are a number of unique features in all three Baltic republics' political economies that made such a radicalisation possible. However, these unique features make it almost impossible for the Baltic experience to be replicable anywhere else in Europe.

Public procurement for innovation represents one of the least studied demand-side innovation policy tools that can be used to increase urban competitiveness. Evidence suggests that local and regional governments are becoming more involved in procuring innovative solutions, but overall knowledge remains limited regarding how they get involved and what effects this involvement has had. Based on a study of Nordic–Baltic Sea cities, the current study reveals that public procurement for innovative solutions has a positive impact on the providers and that urban authorities can act as market creators. The study also demonstrates that public procurement is not seen as an inherent part of innovation policy. A lack of awareness exists among city officials about the connection between procurement and innovation, and local authorities tend not to be willing to take risks when promoting innovation through public procurement. Due to the positive effects, however, further development of related policies is recommended.

The budgetary response of Estonia to the 2008 global financial crisis poses a puzzle. While many other countries increased public expenditure and ran high deficits in 2009, the Estonian government was different: it undertook fiscal retrenchment, combining expenditure cuts and tax increases, despite a large drop in economic output. This article explains why the Estonian government opted for fiscal consolidation during the crisis. The ideological position of the governing parties and their desire the join the euro-zone played an important role in driving fiscal discipline. It also argues that the key to understanding Estonia's fiscal decisions in 2009 is what happened in the 1990s: fiscal policy choices became path-dependent as a result of positive feedback loops from previous periods of fiscal consolidation. Path-dependency was further reinforced by institutional capabilities (or lack thereof) created by initial macroeconomic policy choices.