The small, open economies of Nordic Europe are hailed as paragons of good governance, adapting flexibly to rapid, technological change and shifting patterns of economic competition. But they have also made strikingly poor policy choices and suffered devastating economic crises, as evidenced by the Finnish and Swedish banking crises of the early 1990s, Finnish dependence on Nokia, and Iceland's financial meltdown. Good Governance Gone Bad argues that the reasons for these two, seemingly contradictory phenomena is one and the same. The dense, cohesive relationships that enable these countries to adapt to economic crises with radical reform and restructuring render them vulnerable to policy overshooting and overinvestment. After 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, this book tests the argument against ten similar and contrasting cases in Europe and North America. In doing so, it demonstrates how small and large states alike can learn from the Nordic experience.