WATCH FOR ESTONIA IN THE COMING YEARS

Flexibility and openness are the characteristics and pervasive principles of Estonia's economic policy. Estonia is an e-country with a favourable business climate and cost advantages that is also open to growth. Successive governments have adhered to the principles of Estonia's economic success: a balanced state budget, liberal trade and investment laws, and joining the euro zone, which Estonia did in January 2011. The goal of the economic policy of the government is to create conditions for sutainable economic growth, which will result in increased welfare and real convergence with developed countries. A requirement for stable economic development is macroeconomic stability, which supports internal and external balance.

• The Wall Street Journal and Heritage Foundation's Index of Economic Freedom 2013 ranks Estonia as one of the freest economy in the world (13th out of 177 country)
• Estonia ranks 14th in the Fraser Institute's Economic Freedom of the World 2012 Annual Report.
• The World Economic Forum's Global Competitiveness Index 2012-2013 ranks Estonia 34th among 144 countries. The survey among business leaders measures economic competitiveness based on a combination of technology, quality of public institutions, and the macroeconomic environment.
• According to the World Competitiveness Yearbook 2013, published by the International Institute of Management Development, Estonia ranks 36th among 60 countries and regional economies covered by the WCY.
• Transparency International ranked 32nd out of 174 countries in 2012. Among members of the European Union, Estonia places 15th.
• The World Bank ranks Estonia 21st in its Doing Business in 2012 report, which covers 185 countries.
• The Bertelsmann Transformation Index in 2012 ranks Estonia among the most successful of 128 transformation countries in the world. In the status index, Estonia is fifth after the Czech Republic, Taiwan, Slovenia and Uruguay, and in the management index, Estonia is third after Taiwan and Uruguay.

According to the 2013 forecast of the Estonian Ministry of Finance, the Estonian economy will grow by 3% in 2013 and in the period 2014-2017 Estonian economic growth is expected to stabilize at around 3.5%

Estonia’s open economy, excellent transportation links and central location make it an ideal base for production and distribution. Estonia has captured a considerable share of the rapidly growing transit trade through the Baltic Sea. Foreign investors, mostly Nordic, have made considerable investments into high technology and communication networks in order to modernise the IT communications infrastructure in Estonia. As a result, the Estonian telecommunications sector is one of the most developed in Central and Eastern Europe.

In 2012 73% of Estonia’s total trade was with EU member countries. In 2012 the value of goods exported from Estonia to the European Union (EU27) countries was 8.3 billion euros, accounting for 66% of Estonia’s total exports. Imports from the EU27 countries to Estonia totalled 11 billion euros with the share of 80% of Estonia’s total imports in 2012.

Estonia’s main trade partners are Finland, Sweden, Russia and Latvia. Estonia’s major exports are machinery and equipment, mineral products, agricultural products and food preparations, metals (metal products), and wood (wood products). Estonia’s main imports are machinery and equipment, mineral products, agricultural products and food preparations, and transport equipment.

Today foreign companies dominate in several sectors of the Estonian economy. Banking and telecommunications are dominated by the Nordic players, but the food and electronics industries also rely heavily on foreign capital. In relation to its size, Estonia has long been a leading Eastern European country in attracting foreign direct investments. Estonia is one of the leaders in Central and Eastern Europe in terms of foreign direct investments (FDI) per capita. The stock of total FDI peaked at 14.3 billion EUR as of 31 December 2012. 51% of foreign investment came from Sweden and Finland.

Moving forward, the government hopes to promote a more transparent and open democratic process that encourages citizens to participate. This move, combined with continued economic growth and internal investment, could make Estonia a model for other Eastern European countries.