OECD Economic Surveys: Estonia

2221-2302 (online)
2221-2299 (print)
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OECD's periodic reviews of Estonia's economy.  Each survey examines recent economic developments, policy and prospects, and presents a series of recommendations.
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OECD Economic Surveys: Estonia 2017

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15 Sep 2017
9789264281189 (EPUB) ; 9789264281165 (PDF) ;9789264281158(print)

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The Estonian economy displays numerous strengths, including an excellent business environment, high educational attainment, and solid public finances. However, around a quarter of the population is still at risk of poverty and productivity growth has slowed down. Fiscal room should be used to make growth stronger and more inclusive.
Estonia is well integrated into global trade, and export potential and value-added drawn from trade can improve further. Efforts should concentrate on strengthening adult education, immigration of talents, and cooperation between businesses and researchers.
Investment has weakened, particularly in projects required to increase business productivity. Addressing skill shortages and inefficiencies in the insolvency regime can help raise firms’ investment capacity. Improving the quality of infrastructure projects and developing green investment further is a priority.


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  • Basic Statistics of Estonia, 2016

    This Survey is published on the responsibility of the Economic and Development Review Committee of the OECD, which is charged with the examination of the economic situation of member countries.The economic situation and policies of Estonia were reviewed by the Committee on 19 July 2017. The draft report was then revised in the light of the discussions and given final approval as the agreed report of the whole Committee on 03 August, 2017.The Secretariat’s draft report was prepared for the Committee by Caroline Klein and Zuzana Smidova under the supervision of Pierre Beynet. The Survey also benefitted from contributions by Lorenzo Casullo, Olena Havrylchyk and Veiko Lember. Statistical research assistance was provided by Corinne Chanteloup and editorial assistance by Heloise Wickramanayake.The previous Survey of Estonia was issued in February 2015.Information about the latest as well as previous Surveys and more information about how Surveys are prepared is available at www.oecd.org/eco/surveys.

  • Executive summary
  • Assessment and recommendations
  • Progress in structural reform

    This Annex reviews actions taken on recommendations from previous Surveys that are not covered in tables within the main body of the Assessment and Recommendations. Recommendations that are new in this Survey are listed at the end of the relevant chapter.

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  • Expand / Collapse Hide / Show all Abstracts Thematic chapters

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    • Getting the most out of trade

      Estonia is highly integrated into the global trade system: it exports approximately 80% of GDP and around half of domestic employment is sustained by foreign demand. Given that international trade and foreign direct investment are considered as major channels of technology diffusion and productivity growth, this bodes well for reviving income convergence. To capitalize on the country’s high trade intensity, policymakers need to remove remaining trade barriers and improve policies fostering knowledge diffusion as well as talent retention and attraction. At the same time, to ensure that benefits of more trade are shared across the population, the social safety net should be bolstered, and participation in upskilling programmes and their labour-market relevance increased.

    • Reviving productive investment

      Since the crisis, Estonia has experienced one of the most pronounced declines in the ratio of non-residential investment to GDP in the OECD. In addition, investment in intangible capital has remained well below OECD standards, partly explaining the low innovative capacities of typical Estonian firms. Uncertainty created by regional geopolitical tensions has played a role but poor investment performance stems from domestic factors too, such as a normalisation after the boom years, the lack of adequate skills and insufficient incentives for risk-taking. Improving lifelong learning and maintaining skilled mothers in employment can contribute to reducing shortages in skills needed by investors. Restructuring of insolvent firms should be eased to increase credit recovery and redirect capital to the most productive ones. Developing alternatives to bank funding can support investment in small and innovative firms. While there is room to improve the quality of infrastructure further, selection and prioritisation of projects should improve. Incentives for green investment, in particular to reduce pollution emitted by the oil shale industry and to achieve energy efficiency gains, could be strengthened.

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