glec estonia
TRANSCRIPT
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Estonia An Investor Guide
Contents
1. Introduction ...................................................................................................................................... 2
2. General economic scenario .............................................................................................................. 3
3. Industry overview ............................................................................................................................. 4
4. Financial Institutions ......................................................................................................................... 6
5. Labor Force ....................................................................................................................................... 7
6. Taxation System ................................................................................................................................ 8
7. Currency and Exchange Rate ............................................................................................................ 9
8. Capital Markets ................................................................................................................................. 9
9. Fiscal Conditions ............................................................................................................................. 10
10. Investments and Savings ................................................................................................................. 12
11. Monetary policy and Inflation......................................................................................................... 13
12. Government Debt ........................................................................................................................... 14
13. Money Supply and Interest Rates ................................................................................................... 15
14. Foreign Investments ....................................................................................................................... 16
15. Trade ............................................................................................................................................... 17
16. Balance of Payments Position ......................................................................................................... 18
17. Social Conditions ............................................................................................................................. 19
18. Political Conditions ......................................................................................................................... 20
19. Ease of Doing Business .................................................................................................................... 20
20. Conclusion ....................................................................................................................................... 21
Sources .................................................................................................................................................... 21
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1.Introduction
Estonia is probably one of the very few countries in the world that has lesser male population
than female population. There are roughly 85.4 men per 100 women1in the country. Estonia is a
member of the European Union (EU) and is ranked 12
th
of 162 countries in the Index ofEconomic Freedom 20082.
The Estonian economy was one of the fastest growing in the world until 2006. The growth rates
exceeded 10% annually. Its addition to the EU in 2004 had helped the countries economy to
grow even at a faster rate. The recent financial crisis has however taken a big hit on the Estonian
economy.
Tallinn is the financial centre of Estonia. For any investor, there are three things that attract
him/her to the country: low rate of taxes, educated workforce, and an un-bureaucratic and
investor-friendly government. The real growth for Estonia has come from the innovations in the
information technology sector. Estonia has led the growth in the Eastern European geography
right from the front.
However, the Estonian economy has also suffered from its own set of problems. Given the
current economic slowdown, there have been worries about rising unemployment, fears of
inflation, fall in wages and contraction of the Estonian export markets. The Q1 growth of GDP in
2009 has been -15.1%3
. The rapid increase of current account deficit and the rise in real incomecompared to the rise in productivity have become more severe problems for the economy.
Nevertheless, overall Estonia has enjoyed positive growth and development over the last decade.
The next few years pose an immense challenge for the country. Our study group paper on the
Estonian economy focuses primarily on the recent macroeconomic trends in Estonia, the state of
labor and capital markets, monetary conditions, fiscal conditions, capital and trade flows, major
trading partners, exchange rate movements, the output composition and the trade composition for
the country. In effect, the paper serves as an effective guidebook for any prospective investorcontemplating investing in Estonia.
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2.General economic scenario
Estonia has a modern market-based economy and one of
the highest per capita income levels in Central Europe.
Estonia pursues a free market, pro-business economy.
The GDP4 of Estonia for 2008 (based on Purchasing
Power Parity) was US $ 27.72 billion.
Estonia was able to sustain high growth rates - on
average 8% per year from 2003 to 2007. The economy benefitted from strong electronics and
telecommunications sectors. Its strong trade ties with Finland, Sweden, and Germany were
highly instrumental in driving up growth. However, inflation and current-account deficit has
increased, thereby putting a downward pressure on the country's currency (Kroon). Estonia's
economy has now fallen into recession, primarily due to the slump following the bursting of the
real estate market bubble.
Figure 2 Real GDP Growth in Estonia 1999-2010 compared to the EU
Subject to recent turmoil, the Estonian economy had continued to grow with splendid rates.
Estonian GDP grew with double speeds after appointment to the EU in 2004. The GDP grew by
7.9% in 2007. For 2009, it is expected that the increase in labor costs, rise of taxation, and also
growing prices of oil and food are expected to raise inflation to just above the 10% mark in the
year 2009. Estonias GDP contracted by 3.6% in 2008, and is further projected to contract by
10.3% in 2010.
Figure 1 Sector wise GDP Composition
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A study of growth accounting of the Baltic states outlines the contribution of various factors to
the overall GDP growth. The contribution of labor is negligible and the TFP growth can be
attributed to factors like technological advancements, increased investment, positive effect of
externalities and changes in production composition.
Country Annualgrowth of
GDP
Contributionof capital
Contributionof labor
Contributionof TFP
Estonia 0.051 0.031 -0.005 0.025
% contribution 62 -10 49
Latvia 0.058 0.029 0.003 0.026
% contribution 50 5 45
Lithuania 0.052 0.027 -0.006 0.031
% contribution 52 -12 60
Source: World Bank calculations
Table 1 Growth accounting results for the Baltic countries, 1996-2003(35)
Figure 3 Estonia: contribution of capital, labor and TFP to output growth(35)
3.Industry overview
Estonia has quite a diverse economy with equal importance to industry, transport, commerce and
different services. Immediately after independence, many of the industries were mainly sub
contractors for the Nordic countries due to their low wages. However, with the increase in
wages and the development of skills the importance of sub contracting has decreased. The
complexity of the goods being manufactured has also increased nowadays, electronic goods
like mobile phones manufacture are being subcontracted to Estonian firms. Important sectors are
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processing industry, transport, warehousing and communications, commerce, real estate and
business services. 2/3 of Estonias production is exported.
The share of agriculture in the gross domestic product has decreased from 15% to 3.3% during
19912000. Consequently, employment in agriculture decreased from 15% to 5.2%. Farming hasbecome privatized and is more efficient, partly explaining the drop in employment for the sector.
Mining industry makes 1% of the GDP. Mined commodities include oil shale, peat, and
industrial minerals, such as clays, limestone, sand and gravel. The Estonian economy survives
primarily on the Service Sector.
Estonia has large forested areas and the related industries are wide spread. Though a very small
part of the work force is employed in the forestry sector, they provide the raw material for
timber, paper and furniture industries which form about 8 % of the total production. Oil shale is
an important natural resource and has been used in various industries and also as a source of
electricity generation.
Estonia has a strong information technology sector, partly due to the Tiigrihpe project
undertaken in mid 1990s, and has been mentioned as the most "wired" country in Europe.
Telecommunications industry has grown fast since independence. High usage of mobile phones
and internet has led to increased services being provided through these mediums. The
government is also quite internet friendly with many services available online. Call centers ofvarious companies are present in Estonia.
The sewing and textile industry has grown out of being a destination of cheap labor, but faces
competition from cheap products from China, India and Turkey. Engineering products like
cables, computers, mobile phones, laboratory equipment etc are manufactured in Estonia. The
best growth is seen in capital and durable goods industries.
Transport and transit is an important service industry. Approximately 7.5% of the workforce is
employed in transportation and the sector contributes over 10% of GDP. However transit flow is
decreasing as Russia is using her own ports increasingly. Passenger shipping for tourism is a
highly competitive and profitable business. Tourism has been increasing every year since
Estonia joined the EU. Easier border crossing and abolishment of restrictions has helped in
this.(5)
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Figure 4 Volume Index of Industrial Production 2008-2009
Estonia, however, has a shortage of skilled labor. The industrial output of Estonia has declined
substantially since 2007, and the process was accelerated since the 3rd quarter of 2008 after the
housing sector meltdown in the US.
The main port, the power plants, the postal system, and the national lottery remain state-owned.
In January 2007, the government repurchased the 66 percent of shares of the Estonian Railway
(earlier privatized) to control key part of Estonia's national infrastructure.
4.Financial Institutions
Estonia has more than 50 financial institutions, including six commercial banks and 10 foreign
banks. Four major banks control 95% of the assets. The largest banks are Hansabank, SEB,
Nordea, and Sampo Bank, all of which are owned by Nordic concerns. The two Swedish banks
(Swedbank and SEB) control 70% of the market.
The government has no stake in local credit institutions. Foreign financial firms dominate the
insurance sector. It is easy for foreign investors to obtain credit freely. Private sector has access
to all credit instruments as offered by major banks in Scandinavian region. The banking system
has consolidated rapidly. At the end of 2008, total commercial banks assets was approximately
31 billion USD.6
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Strong presence of foreign (Nordic) banks has increased cross border credit dependence and
vulnerability to its reversals due to changes in parent banks risk assessment. It is highly exposed
to contagion effects of International financial markets.7
5.Labor Force
In 2007, Estonia had a total labor force of 687.4 thousand, of which 655 thousand were
employed. The unemployment rate had come down steadily in Estonia, and was below the
average EU unemployment rates.
Figure 5 Unemployment rates in Estonia
However, with the economic crisis that Estonia is going through, the exports and domestic
demand has declined significantly. This has led to the increase in unemployment rates in Estonia,
and April 2009 estimate is around ~14%.
Estonia provides unemployment insurance for its workers to help them during a search for new
job. The benefits last from 180 up to 360 days depending on the employment history. Also, the
benefits go down after the first 100 days of receiving it.
The country has minimum wages of 278 per month (4350 EEK), 390 when adjusted for PPP
and is on the lower side of the EU.
Estonia witnessed a very high real wage rate growth between 2006 and 2008, while the
productivity growth declined. However, with the economy slowing down, the rate of growth is
projected to come down significantly, and so is the productivity.
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Figure 6 Growth in Labor Productivity Vs Labor Cost
6.Taxation System
Income TaxEstonia is one of the few countries that have a flat income tax rate. The current
rate of personal income tax is 21%. Corporate income is not taxed until the distribution of profits
(dividends). An interesting fact here is that the corporate income tax form only 5% of total tax
collections.
Social Tax Companies also pay a 33% tax on their wage bills that count towards the state
health insurance and pension scheme. The tax forms the largest chunk of the total tax kitty,
contributing around 36% of it.
VAT The second largest contributor to the tax income. The standard rate is 18%. Social
services like healthcare, postal service, etc are exempted from VAT.
ExciseEstonia levies excise duty on fuel, tobacco, and alcohol. Fuel and alcohol levies are the
largest part of the total collection.
19.1%
5.0%
25.9%10.5%
3.2%
0.1%
36.2%
Personal income tax Corporate income tax VAT Excise duties
Local taxes Social contributions Other state taxes
Figure 7 Breakup of government tax revenues
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Since 1991, Estonia has had a series of privatization deals that have seen most formerly state-
owned ventures acquired by private investors.
Long term trends: The emerging markets monitor predicts the following for Estonias capital
markets9
Estonia is facing a hard landing scenario this year, with negative real GDP growth in
the second quarter likely to be replicated in Q3 and Q4. We have revised down our full-
year economic growth forecast to -1.1% with a mild improvement to 2.5% expected in
2009. Beyond then, we still believe that a marked recovery is likely in 2010, with growth
forecast to register at 4.7% and 5.5% in 2010 and 2011, respectively.
Currently, the recessionary effects of the global economy have taken a huge toll on the Estonian
Capital markets. Ott Ummelas of Bloomberg reports that the output has dropped 34.5% in themonth of June 2009. Global credit crunch has led to slump in domestic demand. The capital
markets of Estonia are therefore in a worst position with weak future outlooks.
9.Fiscal Conditions
An investment boom during 2000-2007, especially in real estate, led to overheating of the
economy. The liberalized capital account and currency board limited the policy makers options
to manage the pro cyclical capital flows. Wages also grew rapidly in this period reflecting labor
shortage and skill mismatch. These developments called for counter cyclical fiscal policies, but
in practice budgets have been pro cyclical, with government increasing its spending, and cutting
tax rates.
Estonia has plans to convert from Kroons to the Euro. For this, it has to maintain its fiscal deficit
below 3% of the GDP. The current government has already cut government spending by 4.6% of
the GDP and proposing more taxes and further cuts in spending to maintain the fiscal deficit
level to 3%. However, with the current recession it would be hard for the government to maintain
this level.
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Figure 9 Exports (% change, yoy)(24)
Figure 10 Imports (% change, yoy)(24)
Estonia has always adhered to balanced budget rule and has kept its public debts at very low
levels. This also signifies the fact that the country hasnt used enough counter cyclical role fiscal
policy can play. The approved budget of 2009, based on 2.8% GDP growth, may result in
restrictive measures to prevent much deviation from targeted balance. The growth has been over
driven by non tradable sectors such as construction and real estate. It was financed by large
capital inflows, increasing private debts and leading to current account imbalance. External
financing has been major source of capital in the form of variable interest rates and foreign
currency loans, adding to financial vulnerability. Pro-cyclical fiscal policy amplifies the cycle.
Table 2 Macroeconomic and Financial indicators in selected emerging market economies(7)
Sharp cuts in the government spending and raising taxes might be counterproductive amidst an
economic downturn. The Keynesian school of thought believes that deficit arising out of
spending to climb out of recession is good for the economy. The already declining domestic
consumption might be further hit by the proposed consumption tax, and might drive the economy
into deeper recession.
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Estonia had a huge current account deficit that peaked at 18% of the GDP in late 2007. This
sparked the fears of an overheated economy. However, with the recession, the deficit fell to 9-
10% of the GDP in 2008, and in Q1 of 2009 Estonia saw its first ever balanced current account
since 199310.
Though the exports have fallen off a cliff in Estonia, the current account deficit is contracting.
This partially because of the lower domestic demand and partially because of easing commodity
prices across the world. The declining inflation also helps in further reduction of the current
account deficit.
10. Investments and Savings
Radical economic reforms were undertaken in 1992 which put Estonia on the growth path. Even
while refusing an IMF loan, the subsidies for state owned enterprises were cut. A market
economy slowly came into place through such elimination of inefficiency. An open trade policy
was adopted which brought in foreign investment. Flat tax rates increased economic activity and
encouraged investment and savings.
Figure 11 Saving Rate
The overall national saving rate also declined rapidly in the 90s, but had started to increase again
in the early 2000s
11
. However, while the % investment by households grew, the gross savings ofhouseholds has steadily declined which has led to a large number of households being in debt12.
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Figure 12 Gross household saving rate
11. Monetary policy and Inflation
The Bank of Estonia is the independent central bank of the country, accountable only to the
parliament. It formulates the monetary policy, aiming at a low inflation rate and stable currency
and consumer prices. The monetary policy follows the framework of the currency board. The
Kroon is pegged to the Euro on a fixed exchange rate. The bank cannot issue money uncovered
by high quality foreign reserve currencies. The high level of reserves maintained help to
maintain credibility and low interest rates. The bank can not devalue the exchange rate of the
Kroon. These policies require the budget to be balanced. This mechanism has helped to control
Inflation as shown in the chart below.
Inflation saw an all time high in 2008 when it peaked at 10.4%. However, inflationary pressures
have eased since then mainly due to the economic recession. An IMF report projects the inflation
for 2009 to be around 0.8% and a negative inflation rate for 201013.
The increase in food and fuel prices contributed greatly to the sharp rise in inflation in
2007 and 2008. In 2007, international food and fuel prices increased by 15.2 and 10.4
percent, respectively. The effect intensified in 2008 with a surge of 23.4 and 40.1 percent
in world food and fuel prices.14
Made for Slovenia, these words also hold true for Estonia. However, a large part of the inflation
also came from the increasing inflow of capital into the country prior to the bursting of the
housing bubble in the US.
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Figure 13 Annual Inflation in Germany and Estonia
12. Government Debt
Estonia has always adhered to the balanced budget rule and has kept its public debts at very low
levels. This competitive advantage has been passed on to investors through the low and fixed tax
rates. The government debt level was only 4.8% of GDP at end of 2008the lowest in the EU.
The general government debt as a % of GDP is shown below for some of the EU nations.
Figure 14 Government Debt as a % of GDP
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The low debt has acted in Estonias favor in various agency ratings in comparison to its Baltic
neighbors. According to the Fitchs Credit Rating report of May 2009, only 2% of the countrys
external debt is sovereign owned. They further estimate that 58% of the private sectors external
debt is to foreign parents and hence has a lower risk than market debt.
Agency Previous New Outlook
Fitch's Credit Rating A- BBB+ Negative
Moody's A1 A1 Negative
S&P Currency Rating
(Foreign/Local)
A/A-1 A/A-1 Negative, but removed
from CreditWatch
Table 3 Agency ratings for Estonia (Source: Bloomberg)
13. Money Supply and Interest Rates
Because of the currency board arrangement, money supply is restricted to the foreign reserves
available at the fixed exchange rate. This makes it easier to anticipate the behavior of the central
bank and reduce uncertainty in the monetary policy.
Dec 2004 Dec 2005 Dec 2006 Dec 2007 Dec 2008
M0 16676.44 22174.716 28979.297 29443.212 37838.02
Cash issued 8895.053 10101.719 11763.153 11762.182 11996.322
Cash in circulation in the economy 7714.18 8747.105 10067.66 9873.863 10091.213
Vault cash of MFIs 1180.873 1354.614 1695.493 1888.319 1905.109
Eesti Pank's liabilities to credit institutions 7781.387 12072.997 17216.144 17681.03 25841.698
M1 42041.064 57364.319 72118.12 75793.325 67349.916
Cash in circulation in the economy 7714.18 8747.105 10067.66 9873.863 10091.213
Demand deposits 34326.884 48617.214 62050.46 65919.462 57258.703
o/w EEK deposits 28390.06 39852.245 51713.886 49997.548 45280.374
o/w foreign currency deposits 5936.824 8764.97 10336.574 15921.915 11978.328
M2 58184.352 82599.107 105898.054 120098.653 126645.774
M1 42041.064 57364.319 72118.12 75793.325 67349.916
Time and savings deposits 16143.288 25234.788 33779.934 44305.327 59295.859
o/w EEK deposits 13073.23 17178.324 22612.591 24927.898 37181.544
o/w foreign currency deposits 3070.058 8056.464 11167.343 19377.429 22114.315Table 4 Money supply of Estonia 2004 to 2008 (SourceBank of Estonia)
The interest rates are not set by the central bank, but are market determined. The most common
representations are the TALIBOR (Tallinn Interbank Offered Rate) and TALIBID (Tallinn
Interbank Bid Rate). These are average interest rates, calculated from the interbank interest rates
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of quoting banks. The interest rates have been fairly constant except during the Russian financial
crisis when the interest rate was increased to protect the home currency. Estonias monetary
conditions are affected by the changes in the European Central Bank rates which have a direct
effect on local interest rates.15
Figure 15 Inflation Vs Interest Rates (Data sourceBank of Estonia)
14. Foreign Investments
Estonia has a liberal policy for foreign trade and investments. Domestic and foreign investments
are treated equally.
FDI inflows have increased after its integration into European Union, due to tariff and non tariff
barriers. GDP growth rate has also attracted FDI inflows. However, there has been a huge drop
in the FDI in the first quarter of 2009. FDI totaled 2.6 Billion Kroons, as of end of first quarter of
2009. Approximately 30% of FDI is invested into financial intermediation, 30% in Real estate,
renting, and business activities, 14% in manufacturing, and 13% in wholesale and retail trade.
Scandinavian countries are the largest foreign direct investors in Estonia. Foreigners can invest
in all sectors and can own land (with some restrictions on land purchase exceeding 10 hectares).
Any licenses required for investment are reviewed without any discrimination or favoritism.
Most capital transactions are not subject to control and residents and non-residents may hold
foreign exchange accounts. It has started harmonizing its FDI rules as per EU standards
especially in sectors such as aviation and real estate.
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15. Trade
The Estonian Chamber of Commerce and Industry views the following factors to be the
Estonias major comparative advantages.16
Proximity to the Nordic markets
Location between Eastern and Western Europe
Competitive cost structure and high-skill labour force
Russias 1998 economic crisis affected the Baltic countries through financial and trade links.
Since then, the Baltic countries (Estonia, Latvia and Lithuania) have been steadily moving away
from Russia and towards other EU countries in exports and imports17. Estonia trades primarily
with countries within the EUFinland, Sweden, Latvia, Lithuania, Russia and Germany.
Exports include machinery and equipment (33%), wood and paper (15%), textiles (14%), food
products (8%), furniture (7%), and metals and chemical products. They import machinery and
equipment (33.5%), chemical products (11.6%) and textiles (10.3%).18The Baltic countries have
recently signed a treaty to establish an open and integrated regional electricity market among the
three Baltic States.19
Estonia had no tariff barriers till 2000 but introduced tariffs mainly on agricultural products.
These tariffs are not applied on imports from European Union and its major trading partners-
Russia, Ukraine (with whom it has signed free trade agreements).
Figure 16 Growth in Estonias imports and exports
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Under the current economic crisis, since the EU is expected to be under recession for the rest of
the year, Estonias exports are reducing. Along with the lower exports, domestic demand is also
decreasing. Hence, imports have also reduced drastically. The chart shows the trend in the trade
balance over the past couple of years.
Indicator (million
kroons)
Last Published
Survey Period
Value Change
compared to the
previous period,
%
Change compared to the
same period of the
previous year, %
Exports April 2009 7 697.7 -7.2 -37.6
Imports April 2009 9 455.6 -4.5 -40.6
Table 5 Estonias Export and Import data(22)
A working paper suggests that shocks from EU trading partners explain a significant part of the
variation in Estonias GDP17. Also, since Swedish banks are present in all the Baltic countries, a
spillover effect from other Baltic states or from Sweden is also expected to affect Estonia
severely as with the earlier Russian Crisis.
Figure 17 Trade balance values for Estonia(23)
16. Balance of Payments Position
Estonia is currently in a negative balance of payments situation. However, the Estonian
government expects that the trend will see a reversal in 2010.
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Estonia has been running large current account deficits due to insufficient domestic savings.
With private consumption falling and investment falling, it is easy to understand that increase in
government spending is not the solution.
The country has a positive outlook
for exports, which is driven by an
optimistic vision for exports. The
economy expects the domestic
demand to contract as a result of
recessionary effects. Estonia
therefore expects to consume less
and export more in the future. The
graph on the right clearly shows
how Estonia has managed to keep
in check the negative balance of
payments as a percentage of GDP.
Also, after the recession and the
cooling of world oil and food prices
in late 2008, the negative balance of
payments is expected to decline significantly.
17. Social Conditions
Education: Estonia has consistently invested around 5% of its GDP on education and that has a
marked effect. The country has the third highest adult literacy rate in at world, currently at over
99%.
Healthcare: Estonia has an aging population and with the death rate exceeding the birth rate,
the country faces a problem of declining population. However, it has also witnessed increasing
life expectancy. Estonia has compulsory health insurance for its citizens since 1992 that covers
more than 90% of its population. Estonia spends around 5% of its GDP on healthcare
expenditure and finances a lot of it from the social taxes collected by the government.
Figure 18 Balance of Payments15
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Pensions: Estonia provides to its elderly citizens an old age pension allowance. All citizens
above the age of 63 and who have worked in Estonia for at least 15 years are eligible to receive
the pension. Estonia spends around 6% of its GDP on the pension. However, in April 2009, the
government announced its plan to stop its pension contribution to control the rising fiscal deficit.
18. Political Conditions
Estonia became independent of Soviet rule in 1991. Immediately, a series of political,
institutional and economic reforms were put in place by the government putting the country on
the growth path. In 2004, Estonia joined the EU and NATO. This kind of rapid growth is in
contrast to a country like Georgia which gained independence around the same time, but had to
deal with civil war, poor economic reforms etc.20
Estonia has poor relations with Russia In 2005, Russia refused to ratify the border treaty.
Consequently, the economic effect has been on transit traffic through Estonia from Russia. In
contrast, Estonia has excellent relations with the Nordic countries with who it trades the most.
A coalition consisting of Estonian Reform Party, Social Democratic Party and Union of Pro
Patria and Res Publica came into power with reform party leader Andrus Ansip as Prime
Minister in 2007. However, the Social Democratic Party left the coalition in May 2009. Estonia
is currently under Minority rule and this unstable state cannot be lasting. Disagreements over
policy issues may lead to pre-term elections.21
19. Ease of Doing Business
Estonia was ranked 22nd out of 181 countries in the
Ease of Doing Business index by The World Bank
Group. Before joining the EU, Estonia adapted its
legislation and business procedures to conditions in
Western Europe. Since language was a hindrance is
doing business with the west, focus increased on
learning English. This massive reorientation through
20 years has created a business environment according to Western standards. Starting-up and
closing-down of companies in Estonia is affordable and simple. Compared to its neighboring
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European countries, hiring people in Estonia is a contractual agreement between employer and
employee. The presence of Trade unions is minimal.
20. Conclusion
Estonia is a country of political and economic stability, ease of access, low cost of doing
business and investor fairness. As a leader is applying modern IT solutions; communications
technology makes distances in Estonia irrelevant. Estonian taxes are low and simple, and labor
costs are 33% of those in Sweden or Finland. This gives the economy enough competition boost
to attract foreign investments. Foreign investors have played a crucial role in building the
Estonian economy. The following factors make Estonia an attractive destination for prospective
investors:
StabilityA member of the EU and NATO, it offers long term strength to its investors.
Closeness to the EU- Estonia is the link between Western and Eastern Europe.
Ease of doing business It takes average of seven days to start a business in Estonia, as
compared to world average of 38 days.
Low cost of Capital and taxes Low taxes, no corporate profit tax on re-invested
capital.
Investor Equality- Estonia has high investment and financial freedom, low corruption,strict laws for property rights and a transparent regulatory environment.
The current recession has taken a huge toll on the economy of the country, however in the long
run a generally favorable business environment is present.
Sources
1. UNdatahttp://data.un.org
2. Index of Economic Freedom -http://www.heritage.org/Index/
3. EuroStat -http://epp.eurostat.ec.europa.eu
4. Haver Analytics -Link
5. http://www.estonica.org/
6. http://www.state.gov/e/eeb/rls/othr/ics/2009/117859.htm
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7. OECDLink
8. http://www.absoluteastronomy.com/topics/Economy_of_Estonia\
9. http://www.emergingmarketsmonitor.com
10.Forbes -Link
11.NationMaster [Link]
12.Household saving rate higher in the EU than in the USA despite lower income - Eurostat
13.IMF -Link
14.IMF Selected Issues - Republic of SloveniaLink
15.Bank of Estonia -http://www.bankofestonia.info/frontpage/en/
16.Estonian Chamber of Commerce and Industry -http://www.koda.ee/?id=2097
17.Decoupling from the East toward the West? -Link
18.WikipediaEstoniahttp://en.wikipedia.org/wiki/Estonia
19.Interconnection of Baltic Energy Markets -Link
20.Growing Apart? A Tale of Two Republics: Estonia and Georgia.Link
21.The Economist Intelligence UnitCountry outlook Estonia 2009 - 10
22.Estonia Statisticshttp://www.stat.ee/main-indicators
23.Eurostat - External and intra-European Union trade Monthly statistics Issue 6/2009
24.World BankEU10 ReportMay 2009[PDF]Link
25.IMFhttp://www.imf.org/external/pubs/ft/fandd/2000/09/weber.htm
26.http://www.balticsww.com/post/sharp-drop-for-estonian-fdi/
27.Heritage Foundationhttp://www.heritage.org/index/Country/Estonia
28.http://www.state.gov/e/eeb/rls/othr/ics/2009/117859.htm
29.http://www.oecd.org/document/46/0,3343,en_2649_33733_42585326_1_1_1_1,00.html
30.http://unpan1.un.org/intradoc/groups/public/documents/un/unpan023213.pdf
31.www.aaberg.ee/public/english/Taxes%20in%20Estonia%202009.doc
32.IMFhttp://www.imf.org/external/pubs/ft/survey/so/2009/car041509a.htm
33.http://www.baltic-course.com/eng/analytics/?doc=15160
34.CIA World FactbokEstonia -Link
35.World Bank EU-8 Quarterly Economic Report January 2005 Part III
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