Lumiste, RĂ¼nnoPefferly, RobertPurju, Alari2017-08-282017-08-282008https://hdl.handle.net/10986/28035This 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.en-USCC BY 3.0 IGOACCOUNTINGAGRICULTUREALCOHOLIC BEVERAGESAUCTIONSAUTARCHYBALANCE OF PAYMENTSBANK DEPOSITSBANKING SECTORBANKING SYSTEMBENEFICIARIESBUSINESS ENVIRONMENTCAPITAL ACCOUNTCAPITAL ACCUMULATIONCAPITAL MARKETSCAPITAL MOVEMENTSCENTRAL BANKCLIMATE CHANGECOMMAND ECONOMYCOMMERCIAL BANKCOMMODITYCOMMUNICATION TECHNOLOGYCOMPETITIVENESSCOMPREHENSIVE STRATEGYCONSUMER GOODSCONSUMER PRICE INDEXCONSUMERSCORPORATE INCOME TAXESCORPORATE TAXCREDIBILITYCURRENCY BOARDDEBTDEMOCRATIC SOCIETYDEVALUATIONDIRECT INVESTMENTSDOMESTIC CAPITALDOMESTIC CURRENCIESDOMESTIC MARKETDOMESTIC PRICESDRIVINGECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMIC LIBERALIZATIONECONOMIC POLICIESECONOMIC POLICYECONOMIC POWERECONOMIC REFORMECONOMIC REFORMSECONOMIC RELATIONSECONOMIC STRUCTUREECONOMIC TOOLSECONOMIC VALUEENERGY RESOURCESENFORCEMENT SYSTEMEQUITY CAPITALEXCHANGE CONTROLSEXCHANGE RATEEXCHANGE RATESEXCISE TAXESEXPENDITURESEXPORT MARKETEXPORTSFINANCIAL CRISESFINANCIAL CRISISFINANCIAL SECTORFINANCIAL SERVICESFINANCIAL STABILITYFISCAL POLICIESFISCAL POLICYFIXED CAPITALFIXED EXCHANGE RATEFIXED PRICESFOREIGN CAPITALFOREIGN COMPANIESFOREIGN CURRENCYFOREIGN DIRECT INVESTMENTFOREIGN EXCHANGEFOREIGN FIRMSFOREIGN INVESTMENTFOREIGN INVESTMENTSFOREIGN INVESTORSFOREIGN MARKETSFOREIGN OWNERSHIPFOREIGN TRADEFREE TRADEFREE TRADE AGREEMENTFREE TRADE AGREEMENTSFUELFUELSGASOLINEGDPGDP PER CAPITAGOVERNMENT BUDGETGROSS FIXED CAPITAL FORMATIONGROWTH RATEGROWTH RATESHARMONIZATIONHOLDINGHOST COUNTRIESINCOMEINCOME TAXINDUSTRIAL COUNTRYINDUSTRIAL ECONOMIESINFLATIONINFORMATION TECHNOLOGYINSTITUTIONAL ENVIRONMENTINSTRUMENTINSURANCEINTEREST RATESINTERNATIONAL BANKINTERNATIONAL DEVELOPMENTINVENTORIESINVESTMENT DECISIONSINVESTMENT OPPORTUNITIESINVESTMENT RATEIPOITCJOINT VENTUREJOINT VENTURESJOINT-STOCK COMPANIESLAISSEZ FAIRELAISSEZ FAIRE POLICYLEGAL FRAMEWORKLEGAL SYSTEMLESS DEVELOPED COUNTRIESLIBERALIZATION OF TRADELIQUIDATIONLOANLOCAL GOVERNMENTSMACROECONOMIC POLICYMACROECONOMIC STABILITYMACROECONOMIC STABILIZATIONMANUFACTURING INDUSTRIESMARKET ACCESSMARKET COMPETITIONMARKET ECONOMIESMARKET ECONOMYMARKET PRICESMARKET REGULATIONSMARKET STRUCTUREMARKET TRANSACTIONSMIDDLE-INCOME COUNTRYMOBILE PHONESMONOPOLIESNATIONAL CURRENCYNATIONAL INFRASTRUCTURENATURAL RESOURCENATURAL RESOURCESNEW MARKETSNEW PRODUCTSOPEN ECONOMYOUTPUTOUTPUT LOSSESOWNERSHIP STRUCTUREPENETRATION RATEPENSIONPENSIONERSPENSIONSPER CAPITA INCOMEPLANNED ECONOMIESPLANNED ECONOMYPOLITICAL STABILITYPOLITICAL SYSTEMPOSITIVE EFFECTSPOTENTIAL INVESTMENTSPRICE INCREASESPRICE STABILITYPRIVATIZATIONPRODUCTION COSTSPUBLIC POLICYPUBLIC TRANSPORTATIONPURCHASING POWERRAILRAIL SERVICERAILWAYRAPID GROWTHREAL ESTATEREAL GDPREGULATORY FRAMEWORKREGULATORY REGIMESRETURNROADSAVINGSSECURITIESSINGLE MARKETSMALL ECONOMYSOCIAL COSTSSOCIAL INSURANCE SYSTEMSTOCKSTAKEOVERTAX RATETAX RATESTAXATIONTECHNICAL ASSISTANCETECHNOLOGICAL CHANGESTECHNOLOGY TRANSFERTELECOMMUNICATIONSTRADE ASSOCIATIONTRADE BALANCETRADE BARRIERSTRADE DEFICITTRADE LIBERALIZATIONTRADE NEGOTIATIONSTRADE POLICIESTRADE POLICYTRADE PROTECTIONTRADE REFORMSTRADE REGIMETRADE REGIMESTRADE SECTORSTRADINGTRANSACTIONTRANSACTION COSTSTRANSITTRANSIT SERVICESTRANSIT TRADETRANSITION ECONOMIESTRANSITION ECONOMYTRANSPORTTRANSPORT EQUIPMENTTRANSPORTATIONTURNOVERUNDERVALUATIONUNEMPLOYMENTURUGUAY ROUNDVALUE ADDEDVEHICLESWAGESWEALTHWORLD TRADEWORLD TRADE ORGANIZATIONWTOEstonia's Economic DevelopmentWorking PaperWorld BankTrends, Practices, and Sources10.1596/28035