Case Study Analysis and Solutions

Case ID: 711053

Abstract:
Case Solution & Analysis for Latvia: Navigating the Strait of Messina by Rafael Di Tella, Rawi Abdelal, Natalie Kindred
This case describes Latvia's transition from a Soviet republic into an EU member, its economic boom and subsequent bust in 2008, and its policy response. After implementing significant economic and political reforms in order to qualify for EU membership in 2004, Latvia had turned its sights toward joining the single-currency eurozone, pegging its currency to the euro in 2005 as a step toward that goal. From 2000 to 2007, Latvia achieved faster GDP growth than any EU state. However, when large inflows of capital suddenly dried up in 2008, Latvia had to obtain a financial rescue package from the IMF, World Bank, EU, and several regional countries in order to avoid a full-blown financial and currency crisis. Latvia then adopted an aggressive economic adjustment program centered on maintaining its currency peg, which meant competitiveness would have to be restored by reducing domestic prices, wages, and public expenditures in order to drive down the real exchange rate. Latvia's policy program and initial results are discussed in the case.

Keywords:
Affirmative action, Change management, Competitive strategy, Crisis management, Currency, Devaluation, Economic development, Economic growth, Exchange rates, Execution, Financial crisis, Government, International finance, Speculation, Latvia Navigating the Strait of Messina Case Solution

Click Here to place your order

OR

Contact us directly at ordercasesolutions@gmail.com if you want to solve the above case.