Estland

The economy of Estonia a rapid recovery

Considering the passed decades, the economic development in Estonia seems like a drama in three acts.

 

Bank von Estland
The Bank of Estonia.

1) Integration in the economic system of the Soviet Union:

In the 20th century, due to the Soviet occupation, the economy of Estonia was dominated by the inefficient command economy, stagnation and environmental damage caused by the industry.

 

At that time, Estonia was a supplier of textiles, groceries and electronics for the huge Soviet empire. Everything had to serve the whole system. Any developments that aimed for a more independent economic structure were suffocated by the Soviet government.

 

The reason for this was that Moscow was very keen on keeping the economic dependence of the Soviet republics as strong as possible. In a nutshell, one can say that in this period, the economic system of Estonia was not very promising.

 

 

Estnische Krone Kroon
Estonian Kroon.

2) Political and economic change:

With the political change and the declaration of independence the phase of economic autonomy began on 20 August 1991. Initially, many negative side effects appeared.  

 

Weak infrastructure, disappearing cooperation with former partners and low quality caused lots of problems. To cut a long story short, at the beginning of the 1990s, the economy of Estonia was completely devastated. The economic reality had hit Estonia hard, but it did not break.

 

3) Atmosphere of departure and economic boom:

The new phase of hope and recovery began on July 20, 1992 with the adoption of its own national currency (Eesti kroon). After this date, which had an enormous symbolic meaning, gold and capital reserves were returned to the country and former state-owned enterprises were privatised. The cornerstone for a better future had been laid.

 

Today, the economic growth of Estonia is such as other West European countries can only dream about (GDP 2006: +11%). There is an intense cooperation with neighbouring countries such as Finland and Sweden, but the economic relations with Germany and Russia (import of fossil fuels) are also very good.

 

Estonia mainly produces textiles, furniture, groceries and machines, but agriculture, cattle-breeding and shipbuilding are also quite important. Thus one can claim that economically Estonia is moving upwards despite their inherited burden that has still not been completely removed. In comparison to Latvia and Lithuania this comparison seems to be quite important as these are the two other Baltic countries the economy of Estonia is clearly on the first place. 

 

 

 

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