Estonia can revitalise productivity growth and reap more benefits from its openness. Productivity is relatively low in manufacturing and in large firms, as the manufacturing sector focuses on low-technology goods exports to only a small number of destinations. The economic impact of the Estonian R&D system still appears to be limited, also because of a lack of knowledge transfer. Building on Estonia’s favourable business environment, productivity growth could be raised by promoting smart specialisation and innovation; removing remaining barriers to entrepreneurship and competition; ensuring access to finance for SMEs; upgrading infrastructure; and improving energy efficiency.