Quote Originally Posted by Prazak
It's very hard to generalize about Eastern Europe, C1ue, as I'm sure you know. Much of the de-industrialization resulted less from correcting the gross mis-allocations of industrial assets during the previous decades of command economics, not to mention the economic collapse across all Comecon economies. It was inevitable, westernized economy or otherwise. And the industrial bases of some countries -- Czech Republic and Slovakia come quickly to mind -- have benefited greatly from close proximity to Germany and cheaper/more flexible labor than the German labor force, with a rapid modernization of industry and a surge in industrial wages.
Certainly true, but for Latvia in particular this doesn't apply. Latvia never had the equivalent of the Russian collapse in 1998; it was already firmly digging itself a FIRE hole starting from its independence in 1991.

From wiki:

In 1992, Latvia became eligible for the International Monetary Fund and in 1994 took part in the NATO Partnership for Peace program in addition to signing the free trade agreement with the European Union.

Latvia became a member of the European Council as well as a candidate for the membership in the European Union and NATO. Latvia was the first of the three Baltic nations to be accepted into the World Trade Organization.

At the end of 1999 in Helsinki, the heads of the European Union governments invited Latvia to begin negotiations regarding accession to the European Union. In 2004, Latvia's most important foreign policy goals, membership of the European Union and NATO, were fulfilled. On April 2, Latvia became a member of NATO and on May 1, Latvia, along with the other two Baltic States, became a member of the European Union. Around 67% had voted in favor of EU membership in a September 2003 referendum with turnout at 72.5 percent
While certainly no one would mistake Latvia for Germany, at the same time Latvia was once a fairly significant producer of agricultural machinery.

Where is that industry now? We're not talking about Zhigulys and Trabants...

And the examples of the Czech republic and Slovakia are also interesting - did these nations experience the same real estate bubbles as in the Baltics?

I think you know the answer to that.