Question

Which action has not helped the Baltic states transform their economies? privatizing industries encouraging foreign investment increasing trade with Russia increasing trade with Europe

Answer 1

The correct answer is - increasing trade with Russia.

Increasing trade with Russia is not a step that was made by the Baltic states in order to improve their economies, instead they started to focus more and more on increasing the trade with the European Union. Of course, they do have significant trade with Russia because they are neighbors and Russia has lot of natural resources, but they tried to balance it in order to not be totally dependent by them.

Answer 2

The Baltic states were part of the Soviet Union during a big part of the 20th century. Hence, the industries were state-owned and this was a big change. Similarly, foreign investment was also prohibited a lot during the Soviet Era. Trade with Russia is an integral part of their economy and it has been so for a long time (they were part of the same country in the Soviet Union). Thus, this has not fundamentally transformed their economy. Increased trade with Europe has only become possible lately with some joining the EU and having open borders with the EU. This was very transformative since new resources came in, new trade relationships and exports were encouraged.