Estonia's Economic Development

Lumiste, Rünno; Pefferly, Robert; Purju, Alari

Estonia's Economic Development

Autores

Lumiste, Rünno

Pefferly, Robert

Purju, Alari

Editor

World Bank, Washington, DC

Descripción

This paper is a case study of an open small economy whose development and growth is based largely on foreign trade and foreign direct investment (FDI). One purpose of the paper is to uncover the causes that have created such a development pattern. Estonia is a former socialist economy, part of the Former Soviet Union (FSU), which introduced comprehensive structural and institutional reforms in the 1990s. The country's transition to a market economy has been enhanced by integration with the European Union (EU), which was very important in evolution of institutions. Other research in this paper concerns the role of external anchors upon economic development; that is, mandates that reflect the values, objectives, and aims of a socioeconomic alliance, and which also frame Estonia's economic policy. One conclusion of the paper is that the EU integration process played an important role in creating and supporting development of a liberal, private sector-based market economy. Implementation of the rules, standards, and norms helped to increase the competitiveness of Estonian companies by improving market access to the EU and other markets. The external anchor concept is related to the international agents. A critical factor for future development and structural changes will be transforming Estonia from a transition economy to an innovation economy. The paper examines the role of the information and communication technology (ICT) sector and Skype in this development. The case of Skype demonstrates the much wider impact of the new telecommunication technology on society. Estonia's development in this field is empirical evidence that location, production, technology, and timing along with external anchors represent a catalyst for change.

Palabras clave

ACCOUNTING, AGRICULTURE, ALCOHOLIC BEVERAGES, AUCTIONS, AUTARCHY, BALANCE OF PAYMENTS, BANK DEPOSITS, BANKING SECTOR, BANKING SYSTEM, BENEFICIARIES, BUSINESS ENVIRONMENT, CAPITAL ACCOUNT, CAPITAL ACCUMULATION, CAPITAL MARKETS, CAPITAL MOVEMENTS, CENTRAL BANK, CLIMATE CHANGE, COMMAND ECONOMY, COMMERCIAL BANK, COMMODITY, COMMUNICATION TECHNOLOGY, COMPETITIVENESS, COMPREHENSIVE STRATEGY, CONSUMER GOODS, CONSUMER PRICE INDEX, CONSUMERS, CORPORATE INCOME TAXES, CORPORATE TAX, CREDIBILITY, CURRENCY BOARD, DEBT, DEMOCRATIC SOCIETY, DEVALUATION, DIRECT INVESTMENTS, DOMESTIC CAPITAL, DOMESTIC CURRENCIES, DOMESTIC MARKET, DOMESTIC PRICES, DRIVING, ECONOMIC DEVELOPMENT, ECONOMIC GROWTH, ECONOMIC LIBERALIZATION, ECONOMIC POLICIES, ECONOMIC POLICY, ECONOMIC POWER, ECONOMIC REFORM, ECONOMIC REFORMS, ECONOMIC RELATIONS, ECONOMIC STRUCTURE, ECONOMIC TOOLS, ECONOMIC VALUE, ENERGY RESOURCES, ENFORCEMENT SYSTEM, EQUITY CAPITAL, EXCHANGE CONTROLS, EXCHANGE RATE, EXCHANGE RATES, EXCISE TAXES, EXPENDITURES, EXPORT MARKET, EXPORTS, FINANCIAL CRISES, FINANCIAL CRISIS, FINANCIAL SECTOR, FINANCIAL SERVICES, FINANCIAL STABILITY, FISCAL POLICIES, FISCAL POLICY, FIXED CAPITAL, FIXED EXCHANGE RATE, FIXED PRICES, FOREIGN CAPITAL, FOREIGN COMPANIES, FOREIGN CURRENCY, FOREIGN DIRECT INVESTMENT, FOREIGN EXCHANGE, FOREIGN FIRMS, FOREIGN INVESTMENT, FOREIGN INVESTMENTS, FOREIGN INVESTORS, FOREIGN MARKETS, FOREIGN OWNERSHIP, FOREIGN TRADE, FREE TRADE, FREE TRADE AGREEMENT, FREE TRADE AGREEMENTS, FUEL, FUELS, GASOLINE, GDP, GDP PER CAPITA, GOVERNMENT BUDGET, GROSS FIXED CAPITAL FORMATION, GROWTH RATE, GROWTH RATES, HARMONIZATION, HOLDING, HOST COUNTRIES, INCOME, INCOME TAX, INDUSTRIAL COUNTRY, INDUSTRIAL ECONOMIES, INFLATION, INFORMATION TECHNOLOGY, INSTITUTIONAL ENVIRONMENT, INSTRUMENT, INSURANCE, INTEREST RATES, INTERNATIONAL BANK, INTERNATIONAL DEVELOPMENT, INVENTORIES, INVESTMENT DECISIONS, INVESTMENT OPPORTUNITIES, INVESTMENT RATE, IPO, ITC, JOINT VENTURE, JOINT VENTURES, JOINT-STOCK COMPANIES, LAISSEZ FAIRE, LAISSEZ FAIRE POLICY, LEGAL FRAMEWORK, LEGAL SYSTEM, LESS DEVELOPED COUNTRIES, LIBERALIZATION OF TRADE, LIQUIDATION, LOAN, LOCAL GOVERNMENTS, MACROECONOMIC POLICY, MACROECONOMIC STABILITY, MACROECONOMIC STABILIZATION, MANUFACTURING INDUSTRIES, MARKET ACCESS, MARKET COMPETITION, MARKET ECONOMIES, MARKET ECONOMY, MARKET PRICES, MARKET REGULATIONS, MARKET STRUCTURE, MARKET TRANSACTIONS, MIDDLE-INCOME COUNTRY, MOBILE PHONES, MONOPOLIES, NATIONAL CURRENCY, NATIONAL INFRASTRUCTURE, NATURAL RESOURCE, NATURAL RESOURCES, NEW MARKETS, NEW PRODUCTS, OPEN ECONOMY, OUTPUT, OUTPUT LOSSES, OWNERSHIP STRUCTURE, PENETRATION RATE, PENSION, PENSIONERS, PENSIONS, PER CAPITA INCOME, PLANNED ECONOMIES, PLANNED ECONOMY, POLITICAL STABILITY, POLITICAL SYSTEM, POSITIVE EFFECTS, POTENTIAL INVESTMENTS, PRICE INCREASES, PRICE STABILITY, PRIVATIZATION, PRODUCTION COSTS, PUBLIC POLICY, PUBLIC TRANSPORTATION, PURCHASING POWER, RAIL, RAIL SERVICE, RAILWAY, RAPID GROWTH, REAL ESTATE, REAL GDP, REGULATORY FRAMEWORK, REGULATORY REGIMES, RETURN, ROAD, SAVINGS, SECURITIES, SINGLE MARKET, SMALL ECONOMY, SOCIAL COSTS, SOCIAL INSURANCE SYSTEM, STOCKS, TAKEOVER, TAX RATE, TAX RATES, TAXATION, TECHNICAL ASSISTANCE, TECHNOLOGICAL CHANGES, TECHNOLOGY TRANSFER, TELECOMMUNICATIONS, TRADE ASSOCIATION, TRADE BALANCE, TRADE BARRIERS, TRADE DEFICIT, TRADE LIBERALIZATION, TRADE NEGOTIATIONS, TRADE POLICIES, TRADE POLICY, TRADE PROTECTION, TRADE REFORMS, TRADE REGIME, TRADE REGIMES, TRADE SECTORS, TRADING, TRANSACTION, TRANSACTION COSTS, TRANSIT, TRANSIT SERVICES, TRANSIT TRADE, TRANSITION ECONOMIES, TRANSITION ECONOMY, TRANSPORT, TRANSPORT EQUIPMENT, TRANSPORTATION, TURNOVER, UNDERVALUATION, UNEMPLOYMENT, URUGUAY ROUND, VALUE ADDED, VEHICLES, WAGES, WEALTH, WORLD TRADE, WORLD TRADE ORGANIZATION, WTO