Currency Euro (€) (EUR)
GDP (PPP) 2012 estimate
Total: $27.313 billion
Per capital: $21,059
GDP (nominal) 2012 estimate
Total $22.225 billion
Per capital: $16,636
Population: 1,34 mln
Estonia is the smallest among the three Baltic states, however it is considered to be one of the most successful small economies in Europe.
It is one of the best according to the index of economic freedom and business environment assessment.
Although the country has experiences sharp economic decline in 2008 – 2009, it has managed to get out of recession, and in 2011 the GDP growth was about 4,1 %. Furthermore, economic problems did not prevent from being supported in introducing the euro in 2011.
Although Estonia is in general resource-poor, the land still offers a large variety of smaller resources. The country has large oil shale and limestone deposits, along with forests that cover 50.6% of the land. Estonia also has large reserves of phosphorus, pitchblende, and granite that currently are not mined.
Significant quantities of rare earth oxides are found in tailings accumulated from 50 years of uranium ore, shale and loparite mining at Sillamäe. Because of the rising prices of rare earths, extraction of these oxides has become economically viable. The country currently exports around 3000 tons per annum, representing around 2% of world production.
Industry and environment
Food, construction, and electronic industries are currently among the most important branches of Estonia’s industry. In 2007, the construction industry employed more than 80,000 people, around 12% of the entire country’s workforce. Another important industrial sector is the machinery and chemical industry, which is mainly located in Ida-Viru County and around Tallinn.
The oil shale based mining industry, which is also concentrated in East-Estonia, produces around 90% of the entire country’s electricity.
Estonia is a dependent country in the terms of energy and energy production. In recent years many local and foreign companies have been investing in renewable energy sources. The importance of wind power has been increasing steadily in Estonia and currently the total amount of energy production from wind is nearly 60 MW while at the same time roughly 399 MW worth of projects are currently being developed and more than 2800 MW worth of projects are being proposed in the Lake Peipus area and the coastal areas of Hiiumaa.
Together with Lithuania, Poland, and Latvia, the country is considering to participate in the Visaginas nuclear power plant in Lithuania to replace the Ignalina. However, due to the slow pace of the project, Estonia does not rule out building its own nuclear reactor. Another consideration is doing a joint project with Finland because the two electricity grids are connected.] The country is considering to apply nuclear power for its oil shale production.
Estonia has a strong information technology sector, partly owing to the Tiigrihüpe project undertaken in mid-1990s, and has been mentioned as the most “wired” and advanced country in Europe in the terms of e-Government of Estonia.
Skype was written by Estonia-based developers Ahti Heinla, Priit Kasesalu, and Jaan Tallinn, who had also originally developed Kazaa.
Estonia has had a market economy since the end of 1990s and one of the highest per capita income levels in Eastern Europe. Proximity to the Scandinavian markets, location between the East and West, competitive cost structure and high-skill labor force have been the major Estonian competitive advantages in the beginning of the 2000s (decade). Tallinn as the largest city has emerged as a financial centre and the Tallinn Stock Exchange joined recently with the OMX system. The current government has pursued tight fiscal policies, resulting in balanced budgets and low public debt.
In 2007, however, a large current account deficit and rising inflation put pressure on Estonia’s currency, which was pegged to the euro, highlighting the need for growth in export-generating industries. Estonia exports mainly machinery and equipment, wood and paper, textiles, food products, furniture, and metals and chemical products. Estonia also exports 1.562 billion kilowatt hours of electricity annually. At the same time Estonia imports machinery and equipment, chemical products, textiles, food products and transportation equipment. Estonia imports 200 million kilowatt hours of electricity annually.
Between 2007 and 2013, Estonia receives 53.3 billion kroons (3.4 billion euros) from various European Union Structural Funds as direct supports by creating the largest foreign investments into Estonia ever. Majority of the European Union financial aid will be invested into to the following fields: energy economies, entrepreneurship, administrative capability, education, information society, environment protection, regional and local development, research and development activities, healthcare and welfare, transportation and labor market.
Estonia exports goods to Finland (18,4%), Sweden ( 12,4%), Latvia (8,9%), Russia (8,1%), Germany (5,1%) and Lithuania (4,8%).
Main import partners are Finland (18,2%), Russia ( 13,1%), Germany (12,4%), Sweden ( 9%), Lithuania ( 6,4%) and Latvia ( 5,7%).
Estonia has been an important transit centre since the medieval period. The country’s favorable geographical location, along with its developing infrastructure, offers good opportunities for all transport and logistics related activities. Rail transport dominates the cargo sector, carrying 70% of all goods, both domestic and international.
The road transport sector dominates passenger transport; almost 90% of all passengers travel by road. The reconstruction of the Tallinn–Tartu motorway has gained national attention as it connects two of the largest cities in the country.
Five major cargo ports offer easy navigational access, deep waters, and good ice conditions. The Old City Harbor of Tallinn is the largest passenger port, and one of the biggest and busiest passenger harbors in the Baltic region. It served a record 8.48 million passengers in 2011. There are frequent ferry connections between Tallinn and Helsinki, Stockholm, Mariehamn, and Saint Petersburg. There are 12 airports and one heliport in Estonia, of which the Lennart Meri Tallinn Airport is the largest airport, providing services to a number of international carriers flying to 23 destinations.