Economy of Estonia (0)

Estonian Economy
Estonians earn about half of the average European income , despite the fact that the economic growth during the recent years has been very fast and the differences have been diminishing. Although the extremely vigorous period of economic reforms is now over, the changes that Estonia is presently going through are far more extensive than those in the developed countries.
The Estonian economy is diverse – industry and transport, as well as commerce and different branches of services are all equally important . Due to the available natural resources Estonian economy largely relies on the branches related to the forest ; Estonian energy sector is based on oil shale , a resource quite rare elsewhere in the world. Finland and Sweden are the most important trade partners . The Estonian economy profits significantly from the business generated by more than 2 million tourists a year , most of whom come from Finland.
More than 67% of the Estonian GDP is derived from the service sectors, industrial sectors yield over 28% and primary branches ( including agriculture ) approximately 5.5% of the overall output.
The important sectors of the Estonian economy are the processing industry (approximately 18% of the overall production ), transport, warehousing and communications (15%), commerce (over 14%) and estate , rental and letting, as well as business services (about 16.5%). Agriculture amounts to slightly less than 3% of the overall production, construction approximately 7% and government , education and health care to more than 13%.
Agriculture:Nowadays only about 4% of the workforce is engaged in agriculture and the sector yields just slightly less than 3% of the overall production. Milk cattle, also pigs and poultry are the main farm animals raised in Estonia. Field crops include cereal crops, potatoes and vegetables. Plant products are mostly for internal use, a considerable amount of meat is imported. Some dairy products and some specific products – e.g. cultivated and wild berries, mushrooms, ecologically pure produce etc -are for export . The figures of productivity of the Estonian agriculture are surpassed by those of many climatically better situated countries, but the local produce contain considerably less chemicals and organic farming is gaining popularity.
The forest is among Estonia's most important natural resources and a source of a considerable amount of raw material . Although just 1.2% of Estonia's workforce is engaged in forestry and the branch gives somewhat more than 1.7% of Estonia's production, it provides raw material for timber , paper and furniture industries, which make up another 8% of the overall production and which employ more than 7% of the workforce. The larger part of the output of Estonia's forestry and related industries goes for export, whereas Estonia increasingly exports goods of a higher value . The production and export of wooden construction details , wooden furniture and wooden houses has been going up consistently. The main export destinations are Finland, Sweden, Germany , Norway and Great Britain. Timber companies are located all over Estonia, a number of them in small towns or even in villages. The most important branch among processing industries in Estonia is timber, paper and furniture industry. Second comes the food processing industry, mostly in the form of meat and milk producing, but the production of drinks, bread and confectioneries is also substantial. Food industry that has undergone huge changes during the recent years, offers quite varied products. Estonians love locally produced food, considering it to be purer, of a higher quality and more tasty. For instance , in the early 1990s the majority of the ice- cream on the market was imported as virtually no ice-cream was produced in Estonia, but presently the share of imported product has fallen to 14.5%. Such change has been fostered by production methods that have quickly become more modern and more varied. Several producers hope to soon enter the EU market with their production.
Part 2
Light industry yields a highly varied output from cotton fabrics to clothing and footwear. The fastest production growth can be witnessed in the enterprises of mechanical engineering and metalwork and chemical industries which give more added value.
A widespread preconception, especially in Russia , holds that the Estonian economy depends largely on Russian transit . The reality is different — freight traffic between Russia and the rest of the world is an important source of profit for Estonian ports but the role of transit in the Estonian economy has been consistently decreasing. Slightly more than 70% of the freight flow of the ports and 57% of the rail freight is connected with transit. Such shares are constantly diminishing as Russian oil flow goes through her own ports on an increasing scale . Presently about one third of the freight flow may be related to transit. The principal part thereof is constituted by the export of petroleum products from Russia — first by rail, then by sea with tankers. Other Russian goods that have been transported through Estonia are grain and fertilizers, sometimes other goods as well. The transit from the West to Russia has gradually grown, mostly in the form of containerised freight.
The Estonian national air company Estonian Air has also proven successful as it has managed to increase both cargo volumes and the number of passengers in spite of the hard times in the world's aviation business. In 2004 the number of passengers in Estonia grew almost 35%, considerably enhanced by new routes, including those opened by the cheap airlines .
About 3.4 million tourists visit Estonia every year, the majority of them come Finland and stay for a short period — morning (night) trip from Helsinki to Tallinn, evening (night) trip from Tallinn to Helsinki. Here they visit shops and service outlets. Tourists who come for a couple of days also go to the theatre and other places outside Tallinn. The number of tourists from Sweden and Germany is constantly growing . In 2003 Tallinn was the third-largest cruise destination at the Baltic Sea (after Copenhagen and St Petersburg ), welcoming more than 200 thousand travellers from different parts of the world (USA, Great Britain, etc).
Joining the European Union considerably increased the number of foreign visits in summer 2004, reputedly by 20-25% or even more. The share of diminishing shopping tourists started growing once again as the abolishment of restrictions enabled the Finns to take home more alcohol and tobacco. The number of tourists from more distant countries of the European Union, however , has increased most because of the much easier border crossing and an interest in the new member states . Weekend travellers arrive mostly from Finland but also from Sweden, Russia and Latvia. Visitors arriving by sea usually limit their visit to Tallinn and the areas nearby. People who have come for a longer period travel around the country , visiting the islands , south- east Estonia, nature parks and reserves, enjoying the untouched nature or staying in Estonian sanatoriums and recreation establishments. Hotels and sanatoriums in the so-called resort areas (Pärnu, Haapsalu, the isles , Otepää) are usually packed with foreign visitors.
In the 1990s the majority of Estonian sewing and textile enterprises worked for foreign companies, providing cheap labour for those through subcontracting. Experience and skills gradually accumulated and today the situation has radically changed. In some instances only the design phase is carried out in Finland or Sweden, in some instances everything is done locally. Estonian companies have subcontractors in Latvia, Lithuania , Ukraine, Russia and even China.
Mechanical engineering and motor vehicle industry have experienced a rapid development during the recent years, although the branch became nearly extinct in the early 1990s after the collapse of the Soviet military industry. The local business climate has been revived thanks to the opening of the plant of the international electronics company Elcoteq in 2000, which increased the interest of other foreign engineering companies in Estonian products and production possibilities. engineering products and equipment manufactured in Estonia range from cables, mobile phones and computers to security equipment for cars, laboratory equipment, different hoists and other equipment for different industries.
The economic changes of the 1990s had an especially severe effect on the chemical industry as many of the enterprises were oriented to the Soviet military industry and their products became unnecessary after Estonia regained its independence. In the economic chaos that ruled in Russia, old contacts with Russian enterprises were lost. Several large-scale enterprises of the chemical industry are located in the industrial area of the North -Eastern Estonia and have by now been largely restored, having found new partners and markets as well as new products. The largest factories include Nitrofert, Viru Keemia and Velsicol in Kohtla-Järve and Silmet in Sillamäe.