Success is ensured by development of the economic environment
In the very big picture, it is near certain that the success of a country’s economic development is determined by whether the country has a good economic climate. In this context, it is important that the government has a definite plan how to increase the competitiveness of Estonia’s economy. According to the plan, the labour market has to be made more flexible, investment and saving must be promoted, and the creative economy must be developed. It is necessary to ensure equal treatment for business people and fair competition, and to reduce corruption.
The Estonian economy has developed rapidly, on the strength of domestic demand and increases in foreign investments and trade. Its 11.4% growth in GDP in 2006 not only places Estonia first among European countries but makes it one of the world’s fastest growing countries. The total employment rate has also seen noteworthy growth – by the end of 2006, unemployment had fallen to 5,9% and in places, joblessness had in places been supplanted by a shortage of workers.
In the near future, reorientation to become a supplier of knowledge-intensive products and services will be a serious challenge. To increase productivity and remain in competition, companies must make capital-intensive investments in the years ahead. It is thus important that state enterprise and innovation policy also focus on increasing export.
The government has set a goal of increasing spending on research and development and innovation to 2% of the gross domestic product by 2011 and to 3% by 2015. Half of the necessary funds will be covered by the state from the budget; the other half will be from investments. Estonia must invest a good deal more into ensuring that we have more university graduates with a technical higher education and that the creative potential of our inventors would be better realized in the form of protected patents.
Estonia is launching the Estonian Development Fund, modelled after Finland’s Sitra, which will help modernize the economy.