Publication: Estonia's Economic Development: Trends, Practices, and Sources
Date
2008
ISSN
Published
2008
Author(s)
Lumiste, Rünno
Pefferly, Robert
Purju, Alari
Abstract
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.
Citation
“Lumiste, Rünno; Pefferly, Robert; Purju, Alari. 2008. Estonia's Economic Development : Trends, Practices, and Sources. Commission on Growth and Development Working Paper;No. 25. © World Bank, Washington, DC. http://openknowledge.worldbank.org/handle/10986/28035 License: CC BY 3.0 IGO.”