Developing an integrated policy for rural and regional areas in the Baltic countries

Recognising that market forces is an efficient mechanism for allocating scarce resources in a society, government intervention can only be justified when market forces, for some reason fail to generate an efficient market equilibrium, or when the market equilibrium is perceived to be "unfair" on equity grounds. This paper focuses primarily on the extent to which existing market failures hinder rural development, both in general terms and with special regard to the Baltic countries, and discusses whether existing policies are indeed addressing underlying malfunctions of the economy.