No. 37




Geo-economic Shifts and Estonia’s Changing Playground *

04 June 2018


RiTo No. 37, 2018

  • Erik Terk

    Erik Terk

    Professor of Strategic Management and Future Studies, Tallinn University

The article compares three possible paradigms for explaining the processes taking place in global economy and macroregions: globalisation-centred, geopolitical and geo-economic paradigms. Their focus topics are dealt with, and the limits of their explanatory capacities for comprehending the processes that are going on are discussed. It is found that although globalisation continues, the normative type of globalisation-centred approach, which requires that the states move to the background is not longer sufficient. Business and technology centred globalisation has setbacks, it can be noticed that the states have started to make stronger attempts to curb globalisation (neo-mercantilism, certain protectionist tendencies, in Ian Bremmer’s terminology: gated globalisation).

The emergence of new centres of economic growth is analysed, the redistribution of economic power in the world as a result of their influence and its potential impact on nation states is emphasised, using the approach characteristic of geo-economics. The article reaches the conclusion that it is likely that three large geo-economic spaces will emerge, one of them will form around the USA, the second in East Asia (China will be the central actor there), and the third will be the European Union. The strongest of them will be the East Asian economic space, which will have the power to include also Japan and Australia. The European Union will have problems to be competitive with the other two.

The relations between different centres of global economy (China-USA, China-EU) are discussed. In this context, an overview of Russia’s possible choices in the geopolitical and geo-economic competition is tackled. Estonia’s present and future position in the economic relations between the above-mentioned geopolitical spaces is touched upon. Estonia is a member of the EU’s highly developed but slowly growing economic space. Hence, it should in spite of large geographic distances by acting smartly connect itself better with the fast growing markets at global level, especially the East Asian economic space.

* The article is written in cooperation of the author and the Foresight Centre of the Riigikogu.