The Baltics,Competitiveness on the Eve of EU Accession

This paper assesses the competitive position of the Baltic countries of Estonia, Latvia, and Lithuania, in the light of their accession to the EU, focusing on the viability of maintaining fixed exchange rates upon joining the EU, participating in its exchange rate mechanism and adopting the euro currency. Issues discussed include: effective exchange rate indicators and export performance; productivity developments; equilibrium real exchange rates; and policy implications.