Nation (Re)Building Through Social Investment? : The Baltic Reform Trajectories

Abstract

The chapter departs from the assumption that today’s social investment (SI) reforms need to be understood against the countries’ policy legacies. It traces the development of SI policies in three Baltic States (Estonia, Latvia, and Lithuania) from restoration of independence in the 1990s until the late 2010s and explores policy responses to recalibrate the former communist welfare regime into a competitive, skill-focused model. By analyzing SI reform efforts in education, family policy, and the labor market the study demonstrates that the same legacies had different impacts on different social policy fields, inter alia distorting the political discourse and strategies of reforms. This facilitated the skill creation–oriented inclusive distributional profile in education but less intense and more stratified profiles in other policy areas. Although the three countries share many common legacies (such as a Soviet communist past) and contemporary characteristics (such as developing an Anglo-Saxon prototype of the welfare regime), there are important cross-country differences in priorities and agility of SI reforms. The interplay of government composition and nation-building discourse intervened with the politics of reform and resulted ultimately in a more agile reform trajectory in Estonia and Latvia compared to mono-ethnic Lithuania. The chapter concludes that legitimizing radical reforms through nation-building turns out to be a more important factor in reform agility than ideologically favorable coalitions.