Pussagrautā namā pa kāpnēm uz augšu. Vai līdzīgs ceļš Latvijai? Foto: Andrius Ufartas, F64/BFL.
The terms ‘internal devaluation' and ‘austerity' were not much used until rather recently, indeed, ‘internal devaluation' seems to have been coined just a few years ago, but these days both are synonymous with Latvia.
Following the IMF - Bank of Latvia conference on 5 June 2012 a hefty debate on whether or not internal devaluation had been successful in Latvia emerged. I tried to cover both sides here and my own view is that a high degree of success cannot be dismissed but it has not been an outright victory - it is not either black or white as most of the debate unfortunately has been.
Very much the same can be said about austerity. This piece, by Michael Hudson and Jeffrey Sommers, which I addressed here for its unfounded allegations e.g. concerning crime rates in Latvia, claims that in no way or form might Latvia be a model country for others. Anders Aaslund, of the Peterson Institute, comes to the exact opposite conclusion, writing e.g. that "Latvia's crisis resolution is a political economy success story".
