If we believe that the small, open economies of Nordic Europe are paragons of good governance, why are they so prone to economic crisis? In Good Governance Gone Bad, Darius Ornston provides evidence that adapting flexibly to rapid, technological change and shifting patterns of economic competition may be a great virtue, but it does not prevent countries from making strikingly poor policy choices and suffering devastating results. Home to three of the "big five" financial crises in the twentieth century, Nordic Europe in the new millennium has witnessed a housing bubble in Denmark, the collapse of the Finnish ICT industry, and the Icelandic financial crisis.
Ornston argues that the reason for these two seemingly contradictory phenomena is one and the same. The dense, cohesive relationships that enable these countries to respond to crisis with radical reform render them vulnerable to policy overshooting and overinvestment. Good Governance Gone Bad tests this argument by examining the rise and decline of heavy industry in postwar Sweden, the emergence and disruption of the Finnish ICT industry, and Iceland’s impressive but short-lived reign as a financial powerhouse as well as ten similar and contrasting cases across Europe and North America. Ornston demonstrates how small and large states alike can learn from the Nordic experience, providing a valuable corrective to uncritical praise for the "Nordic model."
About the Author
Darius Ornston is Assistant Professor in the Munk School of Global Affairs at the University of Toronto, where he specializes in comparative political economy and innovation policy. He is the author of When Small States Make Big Leaps, and his work has also been published by Comparative Political Studies, Comparative Politics, Governance, Review of Policy Research, Socio-Economic Review, West European Politics, the European Bank for Reconstruction and Development, the OECD, and the World Bank.
Table of Contents
Introduction: The Nordic Paradox
1. Good Governance Gone Bad: Overshooting in Nordic Europe
2. Manufacturing a Crisis: Planning in Sweden
3. Connecting People: Innovation in Finland
4. From Banking on Fish to Fishy Banks: Liberalization in Iceland
5. Overshooting in Comparative Perspective: Contrasting Cases
6. Overshooting beyond Nordic Europe: Ireland and Estonia
Conclusion: Lessons for Large States
Appendix 1: Measuring Cohesive, Encompassing Networks
Appendix 2: Characterizing Economic Adjustment
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