Thanks for your comments, Uldis!
I think I largely/fully agree with you. And, certainly, one should always be very cautious about using Iceland as a comparator since its economy is so very different from most other economies. But given its massive devaluation it is tempting. In a follow-up article I will argue that, yes, exports via devaluation cushioned their GDP fall (though certainly not Icelandic wages in EUR terms) but a perhaps stronger effect came from a massively countercyclical fiscal policy.
Price effects are indeed eliminated - the numbers/graphs for exports are for volumes only.
I can agree that the time period is perhaps (still) a bit short but these devaluations/depreciations happened 3-4 years ago and I don't want to sit on my hands for another couple of years before addressing this... :-)
And, yes, including Poland would be a good choice.
Sure!
The USSR could send a man (and a dog...) into orbit around the planet but could not/would not supply enough sausages - high GDP, happy apparatjiks, impoverished people.....
Good point from you (and Gundars) but I think one should still be careful and not just dismiss the (late Soviet) GDP figures. Sure, they may have reflected some aspirations of the state much more than the wishes of the people but GDP is supposed to reflect total value added - whether we then like that value added is another matter. The value of value added.....
Sounds good though I am entirely incompetent in evaluating whether that is possible or not...
Suffice it for me to say: The facilities looked REALLY impressive - and REALLY expensive in terms of energy use.
I think outdated is a too strong word - I prefer to think of what the causality is or if it is even there.
The market share (certainly if it is share of world trade) could easily be misleading, couldn't it? Latvia is about as open/liberalized in terms of trade as it can be (although I shall agree to that it for whatever reason is lacking behind Lithuania) while hitherto more closed countries might be opening up, thus grabbing a larger share of world trade but just because Latvia already has done this opening up.
BUT: If, in some sunny year in the not too distant future, Latvia should actually produce GDP growth AND a trade surplus, I shall yell it out from every street corner.... :-)
And the comparison that one should do with Belarus is not so much on lost LV GDP during the crisis (Belarus did, to the best of my knowledge not have any similar credit boom as to what happened here).
Rather, one should be interested in why Latvian GDP per capita is not that much ahead of Belarusian GDP per capita.
If I wanted to say something else then a) I wonder what that would have been and b) I wonder why I did not do that?!?!?!?!?!?!?!?!?!
But it obviously makes me think what your message really is.... :-)
Latvia's 2007 GDP was made with a number of people working that will never be seen again and an unemployment rate way, way below any equilibrium rate, indeed indicating that GDP was at an unsustainable level.
I don't really think I try to put Latvia's policy in a positive light, just try to say that an overshooting in terms of devaluation would have been rather (very) unwelcome, too.
If you decompose Latvian GDP you have that exports is the only component that is above its 2007 Level (when GDP peaked), indicating that internal devaluation has taken place and that competitiveness seems restored.