Entrepreneurial activity in Estonia is almost non-existent. Because of its global political and economic influence the United States has a strong relationship with Estonia. This relationship is destined to increase entrepreneurship in Estonia. The United States is among the countries with which Estonia has very intensive cooperation in the defense and security field. Estonia, a former soviet republic, is still facing challenges. In 2003 the GDP was 8.3 billion with a growth rate of 5.1%, but unemployment was at 10%. The GDP is comprised of 70% services for example transit, information technology, and telecommunications, and 26% industry for example textiles and engineering.

Estonia still faces challenges. Agricultural privatization has caused severe problems for farmers needing collateral to be eligible for loans. The income differential between Tallinn and the rest of the country is widening. Standards of living have eroded for the large portion of the population on fixed pensions. The formerly industrial northeast section of Estonia is undergoing a severe economic depression as a result of plant closings. The privatization of state-owned firms is virtually complete, with only the port and the main power plants remaining in government hands. The constitution requires a balanced budget, and the protection afforded by Estonia’s intellectual property laws is on a par with that of Europe’s. In early 1992 both liquidity problems and structural weakness stemming from the communist era precipitated a banking crisis. As a result, effective bankruptcy legislation was enacted, and privately owned; well-managed banks emerged as market leaders. Today, near-ideal conditions for the banking sector exist. Foreigners are not restricted from buying bank shares or acquiring majority holdings.

Estonia’s liberal foreign trade regime, which contains few tariff or non-tariff barriers, is nearly unique in Europe. Estonia also boasts a national currency that is freely convertible at a fixed exchange rate, and conservative fiscal and monetary policies.

The relationship between Estonia and the United States of America has been constant and strong since Estonia first became independent. the United States is one of Estonia’s most important partners.

Important Resources