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“Foreign direct investments in the Estonian economy” (0)

5 VÄGA HEA
Punktid
Inglise keel - Kõik luuletused, mis on inglise keeles
ESTONIAN UNIVERSITY OF LIFE SCIENCES
Institute of Economics and Social Sciences
BOOK REVIEW
(“ Foreign direct investments in the Estonian economy ”, University of Tartu,
Urmas Varblane)
(Pages : 10 20)
Prepared: Kadri Tamm, MF-I-5
Tartu 2007
I read book about direct investments in the Estonian economy. The book is issued by University of Tartu and the writers are also scientists from University of Tartu.
Foreign direct investments are relatively new phenomenon for Estonia because during the nearly five decades as part of the Soviet economic system, our economy received virtually none. Such economic isolation from the West lasted until the early 1990s . In consequence of the mid-1990s’ radical macroeconomic reforms, foreign direct investments started to play a significant role in the Estonian economy. Currently Estonia ranks third after Hungary and the Czech Republic by per capita indicators of the inflow of foreign direct investments. Presumably, the experience of our recent past provides sufficient data to analyze how foreign direct investments impact on different aspects of the economic restructuring process in Estonia.” Urmas Varblane
Foreign investments
Sound and liberal economic policies and excellent business climate has ensured a continuous growth of foreign direct investment (FDI) into Estonia. During the last 15 years Estonia has been one of the leading countries in Central and Eastern Europe in terms of inward investment per capita.
Numerous foreign companies have found Estonia to be a highly attractive location . Companies partly or wholly owned by foreigners account for one-third of Estonian GDP and over 50 percent of the country `s exports.
The general trends in foreign direct investment inflows can be summarized as follows:
  • during 1995-1996 the majority of the foreign direct investments were privatization-related;
  • there is an increase in terms of reinvested earnings since 1996 which was 66% of the total annual inflow of FDI in 2007;
  • there is a trend towards increasing share of cross -border acquisitions;
  • the share of greenfield investments has grown slowly as well.

FDI by Activities and Countries
By the end of June 2008, the cumulative stock of foreign direct investment in Estonia amounted to EUR 11.76 billion . 32.9% of those FDI has been invested in financial intermediation, real estate, renting and business activities followed with 27.5% and manufacturing with 14,4%.
The Scandinavian countries are the biggest source of foreign direct investment in Estonia. Sweden tops the list of investing countries with 39% of the total, followed by Finland with 23.9% and the Netherlands with 7.4%.
Regional Distribution of FDI
Tallinn and the counties surrounding the capital continue to be the most favourite areas for foreign direct investment in Estonia. However , a number of other regions have experienced increasing interest with major investments being made by Estonian Cell, (pulp production , Lääne Virumaa) and Wendre (textile production, Pärnumaa). Also the Ida-Virumaa region has attracted an increasing amount of FDI relating to its traditionally strong position in heavy metal and minerals industry.
Legal Framework
Estonia does generally not apply any restrictions or limitations on foreign capital invested into Estonia or its repatriation. (There are some special requirements though, when a foreign investor wishes to acquire land in excess of 10 hectors.)
To encourage companies to expand their businesses, all corporate reinvested profits are exempted of income tax since Jan 1, 2000. However, any distributed profits, for example dividends , are taxed at a 21% rate .
Foreign trade
Proximity to the Nordic markets, location between Eastern and Western Europe, competitive cost structure and high-skill labour force have been the major Estonian comparative advantages since the 1990’s. As a member of the European Union, Estonia today obviously enjoys free trade within the Union, and full participation of external trade agreements signed by the Union.
In November 1999 Estonia became a member of the World Trade Organisation (WTO), and in May 2004 the country joined the EU. Already from its early years of re-independence in the 1990’s, Estonia pursued a clear pro-trade policy, opening up its borders to foreign trade and investments in a quite unique way. This early exposure to foreign competition and capital, guaranteed the country a comparatively quick transformation to a full-fledged market economy, dominated by the spirit of free-trade, already before joining the EU. Also as a consequence of the openness, many large Estonian companies are today owned by foreign capital, and the share of subcontracting works in exports is still high.
Estonian Foreign Trade in 2007
In 2007 the exports of goods made up to 8 billion EUR and imports accounted for 11.3 billion EUR. Compared to the previous year, the value of exports increased 4% and of imports 6% which is the smallest growth during the last four years. The slowdown of the growth was partly caused by the rapid growth rate of exports and imports in 2006 (24% and 30%, respectively).
“In conclusion can say that there are good reasons to forecast a strong future inflow of foreign direct investments into Estonia’s economy. But future FDI flows will be formed as a consequence of realizing different scenarios of development , which combine the process of European integration, the geopolitical situation in the region, the state of the world economy, and the development policy of the country itself,” Urmas Varblane
phenomenon
nähtus
ranks
kohal; järjestama, reastama; klassifitseerima
per capita
inimese kohta; võrdsetes osades; hääletamine; üks hääl
inflow
sissevool , juurdevool
presumably
arvatavasti, oletatavasti, eeldatavasti
impact
mõju, toime, efekt; impulss
numerous
arvukad
foreigner
välismaalane, võõramaalane; võõras; muulane
trend
suund; suundumus, trend; kalduvus, hoiak; suunitlus; muutus
summarize
summeerima, kokku võtma; lühidalt väljendama
privatization-related
erastamisega seotud
reinvest
taasinvesteerima
cross-border
piiriülene
acquisition
hankimine v soetamine ostu teel; omandatud v soetatud vara, soetis
greenfield investment
investeering nullprojekti
cumulative
kuhjunud, kogunenud, kumulatiivne
stock
aktsiakapital ,(põhi)varu, tagavara ; väärtpaber; fond, varuma
amount
kogusumma; kogus, hulk; summeerima; ulatuma
financial intermediation
finantsvahendus
distribution
jaotus, jaotamine, jagunemine; turustamine
legal framework
juriidiline süsteem
apply
taotlema, paluma; kasutama; vastama, sobima; käiku laskma
restrictions
kitsendus , kitsendama; piirang, piiramine; koduarest
limitations
piirangud, kitsendused; piiravad asjaolud
repatriation
ümberjagamine; ümber jagama , uuesti jaotama
requirements
nõuded; vajadused; vajalikud asjad, vajalikud eeldused v tingimused
acquire
omandama, soetama , hankima; üle võtma
profits
kasum; kasumit saama, tulu saama; tulu hankima
proximity
lähedus
pursue
taotlema, püüdlema; (plaani) järgima
exposure
avalikkuse tähelepanu juhtimine ettevõttele v tootele; avalikustamine
full-fledged
täieõiguslik
subcontracting
alltöövõtu andmine, lepingu sõlmimine alltöövõtjaga
compare
võrdlema, kõrvutama; võrreldav olema
value
kasutusväärtus; kõrgelt hindama , väärtustama; suurus, näitaja
respectively
vastavalt
forecast
ennustus, prognoos; ennustama
scenarios
stsenaarium
integration
ühinemine; kombineerimine; tervikuks liitumine; tervik
Foreign direct investments in the Estonian economy #1 Foreign direct investments in the Estonian economy #2 Foreign direct investments in the Estonian economy #3 Foreign direct investments in the Estonian economy #4 Foreign direct investments in the Estonian economy #5
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