"Within one month our revenues had jumped over 50%."

Doing Business in Estonia

estonia

Estonia is a democratic parliamentary republic, With a population of 1.34 million, it is one of the least-populous members of the European Union, Eurozone and NATO.   The capital and largest city is Tallinn. Estonia has the highest GDP per capita among former Soviet republics, according to the Global Politician, which measured it at $15,272. Estonia is listed as a “High-Income Economy” by the World Bank and as an “advanced economy” by the IMF, the country is also a member of the  OECD. The United Nations lists Estonia as a developed country with a Human Development Index of “Very High”.The country is also ranked highly for press freedom, economic freedom, democracy and political freedom and education.

Due to its rapid growth, the Estonian economy has often been described as the Baltic Tiger. Beginning 1 January 2011, Estonia adopted the euro and became the 17th Eurozone member state. A balanced budget, almost non-existent public debt, flat-rate income tax, free trade regime, competitive commercial banking sector, an innovative e-Services sector and even mobile-based services are all hallmarks of Estonia’s market economy.  Oil shale energy, telecommunications, textiles, chemical products, banking, services, food and fishing, timber, shipbuilding, electronics, and transportation are key sectors of the economy. Although Estonia is in general resource-poor, the land still offers a large variety of smaller resources. The country has large oil shale and limestone deposits, along with forests which cover 50.6% of the land. In addition to oil shale and limestone, Estonia also has large reserves of phosphorite, pitchblende and granite which are not mined or mined extensively at the moment. Estonia also has a strong information technology sector, and has been mentioned as the most “wired” and advanced country in Eastern Europe

Estonia today is mainly influenced by developments in Finland, Sweden and Germany; who are Estonia’s three main trade partners. The government has recently dramatically increased its spending on innovation. There are big differences in GDP between different parts of Estonia. Currently, over half of the Estonian GDP is created in the capital of Tallinn, indicating that the Estonian economy is highly concentrated, as reported by Baltic Business News. In 2011, the real GDP growth in Estonia was 8.0%. According to the CIA World Factbook, Estonia exports mainly machinery and equipment, wood and paper, textiles, food products, furniture, and metals and chemical products. Estonia also exports 1.562 billion kilowatt hours of electricity annually. At the same time Estonia imports machinery and equipment, chemical products, textiles, food products and transportation equipment. Estonia imports 200 million kilowatt hours of electricity annually.

Overall, Estonia is a relatively good market to do business in. It was ranked at 24th for Ease of Doing Business by the World Bank, for 2012. In the same ranking, Estonia was ranked 65th for Protecting Investors, 29th for Enforcing Contracts, and 3rd for Trading Across Borders. So it can be noted, that Estonia is an exceptionally friendly country in terms of doing trade with. While the Financial Crisis of 2008 seriously affected the Estonian economy, long-term prospects for the Estonian economy remain among the most promising in Europe. By 2050, according to the same projections, Estonia could be the most productive country in the EU after Luxembourg and thus be among the top 5 most productive nations in the world. As a result, the Estonian economy is clearly among the bright spots in Eastern Europe at the moment.

 

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Author:Globial International Business Team

The Globial International Business Team researches, analyzes, and reports on all things related to global trade and business.

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