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Small Baltic Tiger with a big roar
KNOWN as one of the Baltic Tigers because of its strong economic growth, Estonia is a relatively small country in Northern Europe that has grown in scope and impact far beyond its borders.
Although it has a population of just 1.3 million and the third lowest population density in Europe at 30.3 people per square km, Estonia is a developed country with an advanced, high-income economy that, as of 2011, is among the fastest growing in the European Union.
Estonia ranks very high in the UN's Human Development Index, with its 2015 PISA test scores placing Estonian high school students third in the world, behind Singapore and Japan.
The country has a strong emphasis on business-friendliness and enterprise. It has been placed 12th in the World Bank's 2017 Ease of Doing Business Index, surpassing neighbouring Finland, Australia, Germany, Canada and Switzerland and is 6th in the Economic Freedom Index, ahead of Canada, and just behind other well-known strong and open countries such as Switzerland and Australia.
Estonia's strong focus on the IT sector has led to much faster, simpler and efficient public services where filing a tax return takes less than five minutes and online banking predominates. It has been a member of the EU since 2004 and adopted the euro as its currency in 2011.
In 2016, the export of goods totalled 11.9 billion euros (S$19.4 billion) and total imports amounted to 13.5 billion euros, and has been growing at an average of 3 per cent a year. Estonian foreign trade is mainly based on strong economic ties within EU but also Russia and other countries.
The main export destination countries were Sweden (17.9 per cent), Finland (15.9 per cent) and Latvia (9.2 per cent) and the main source of imports were Finland (13 per cent), Germany (11 per cent) and Lithuania (9.5 per cent). In 2016, the share of European Union countries in Estonia's total exports was 74 per cent and total imports was 82 per cent.
Since regaining independence in 1991, the country has put a lot of effort in developing eGovernance solutions and is today one of the world's most digitally advanced societies. In 2005, Estonia became the first nation to hold elections over the Internet, and in 2014 the first nation to provide e-Residency, a novel digital nation concept for global citizens. e-Residency is a government-issued digital ID available to anyone in the world. It offers the freedom to easily start and run a global business in a trusted EU environment
Estonians have been at the forefront of some key technological innovations. For example, Skype revolutionised communication; TransferWise changed international money transfers, and GrabCAD helps to build products faster while Starship robots reframe local delivery. This is proof of the vibrant startup culture in Estonia. Many Estonian technology companies set up their Southeast Asian base in Singapore too: fintech companies Smartly, Change, TransferFriend, BitOfProperty and TransferWise are examples.
The country is working hard to become one of the world's best places for startups by building a strong ecosystem, training the founders and educating the local investors - as well as attracting foreign investors and initiating new accelerator funds. No less important is ensuring friendly regulations to make it easy to operate a startup, invest or raise funding in Estonia.
In addition, a simple tax system with flat rates and low indirect taxation, openness to foreign investment, and a liberal trade regime have supported the resilient and well-functioning economy.