Estonia Essay ⋆ Business Essay Examples ⋆ EssayEmpire

The country of Estonia is the northernmost of the three Baltic States, having been a part of the Russian Empire from 1721 until independence in 1918. In 1940, it was invaded by the Soviet Union, and in 1941 it was invaded again, this time by Nazi Germany. The Red Army retook Estonia in 1944 and occupied it until independence in 1991. On May 1, 2004, Estonia joined the European Union. The country now has one of the fastest-growing economies in the world.

Estonia is known for involvement in multiple industries, but has especially extensive timber, with forests still covering some 47 percent of the land, and there are also limestone deposits. The Estonians have a regional reputation for canniness in financial matters, and before World War I, although some 90 percent of the population were ethnic Estonians, there was a substantial German business class. There were also several thousand Swedes who had an important role in local commerce that was out of proportion to their small number.

During the period when Estonia was part of the Russian Empire, the city of Tallinn became relatively wealthy. One of the merchants of the city, Robert von Glehn (1801–85), moved to London, and his son, Alfred George de Glehn (1848–1936) made a major contribution to the development of the steam locomotive. After independence, Estonia started to develop many of its own industries to prevent reliance on other former parts of the Russian Empire. It exported timber and timber products, dairy products, cotton, and wool. Many imports came from Germany and also Austria, with Steyr automobiles being popular. There was also a substantial trade with Britain involving companies such as Ilford Limited for photography.

While Estonia was a part of the Soviet Union, the economy was centrally controlled, and many Russians settled in Estonia; Russians now make up 25.6 percent of the population of the country, while 68.7 percent are Estonians. The Estonian capital, Tallinn, remained a prosperous city, not having been as badly damaged during World War II as many others in the region. With independence, the new Estonian government decided that as an economic policy, they would allow the free market to operate, and as a guarantee against future invasion, the country would seek close ties with the West. These objectives saw Estonia welcome investment, tourism, and joining the European Union.

The transformation of the Estonian economy after independence has seen a move from a period when it is believed that up to 90 percent of the economy was controlled from Moscow, and all the major economic decisions were made there, and when some 95 percent of the labor force worked in government owned enterprises or on collective farms, to a major embracing of the free-market economy, engagement with the International Monetary Fund, and trade with northern and western Europe. The selling off of state property to allow private property ownership was a major plank in the policy of the Estonian government and property was returned, when possible, to the pre-1940 owners, or compensation paid.

The new Estonian currency, the kroon, was pegged to the U.S. dollar to ensure confidence in it and also stability, and this reduced any threat of inflation that had badly affected nearby Lithuania after it achieved independence. Foreign trade has grown massively, as has foreign investment in Estonia, and it has become a popular holiday destination for many Europeans.

The major exports from the country are machinery and equipment (24 percent), wood products, textiles, food and food products, metals, and chemicals. Machinery and equipment make up 31 percent of the country’s imports, with food, metals, and textiles also being imported. Some 23 percent of exports go to Finland, and 15 percent of imports come from Finland. There is also considerable bilateral trade with Germany, Russia, and Sweden.

Bibliography:

Davis, “Web War One,” Wired (v.15/9, 2007); The Europa Year Book (Europa Publications, 2008);
Rünno Lumiste, Robert Pefferly, and Alari Purju. Estonia’s Economic Development: Trends, Practices, and Sources; a Case Study (Commission on Growth and Development, 2008);
Jaan Masso and Priit Vahter, Technological Innovation and Productivity in Late-Transition Estonia: Econometric Evidence from Innovation Surveys, Working Paper Series, University of Tartu, Faculty of Economics and Business Administration, 61 (Tartu University Press, 2008);
Wayne C. Thompson, Nordic, Central, and Southeastern Europe, 2007 (Stryker-Post Publications, 2007).

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