Foreign Direct Investment in Estonia: Fostering the transition process?

Résumé du document

Estonia, as a new member of the World Trade Organization and the European Union, has transitioned effectively to a modern market economy with strong ties to the West, including the pegging of its currency to the euro. The economy benefits from strong electronics and telecommunications sectors and is greatly influenced by developments in Finland, Sweden, and Germany, three major trading partners. The current account deficit remains high, at about 14 percent of GDP in 2004. However, the state budget enjoyed a surplus of $130 million in 2003. Since its accession to independence in 1991, Estonia didn't stop to advance on its way to become an industrialized country and in the space of 10 years, a country of 1,3million people and having nearly the size of Netherlands has gone from being part of a closed and inefficient economy to being acclaimed as the leading transition economy of the former socialist bloc and as one of the most promising economies in the world according to some economic ranking.

Extraits

[...] Soon thereafter, in 1993, a seven-year monopoly in fixed lines was granted to ETC in exchange for commitments to modernize the country's infrastructure. In spite of a limited state budget, large investments were made in telecommunications infrastructure dring the 1990s, including a mobile network that was bought second hand from its Nordic neighbors. The most important initiatives are: - a fixed line 7 year monopoly granted to the Estonian Telecom Company, in exchange for commitments to modernize the country's infrastructure. [...]

[...] Opportunities in a country change through time. The biggest influence is the country itself Resource-seeking Companies invest abroad in order to get hold of resources which are either not available in the home country or only at very high prices. Examples are: natural resources raw materials, or low-cost labour. The latter is very important for the manufacturing sector because then companies can produce at a very cheap level. Availability of low-cost labour is a prime driver for export-oriented FDI as seen in the Volkswagen and Audi example earlier. [...]

[...] http://www.estonica.org/eng/lugu.html?menyy_id=99&kateg=43&alam=61&le ht= http://europa.eu.int/abc/history/1995/index_en.htm 20. http://www.legislationline.org/index.php?topic=245&country=15&org=0&e http://www.esis.ee/ist2000/einst/society/judicial_reform.htm 22. http://www.wider.unu.edu/wiid/wiid.htm 23. http://www.bertelsmann-transformation-index.de/ 176.0 .html?&L= http://www.bertelsmann-transformation-index.de/ 176.0 .html?&L= http://www.bertelsmann-transformation-index.de/ 176.0 .html?&L= http://estonia.usembassy.gov/inv.php 27. http://www.cia.gov/cia/publications/factbook/geos/en.html 28. http://www.investinestonia.com/index.php?option=displaypage&Itemid=11 2&op=page&SubMenu= 29. http:// www.rabobankgroep.nl/download/Baltics04.pdf 30. http:// europa.eu.int/comm/economy_finance/ publications/european_economy/2004/cr2004_en.pdf 31. http://www.bertelsmann-transformation-index.de/ 176.0 .html?&L= http://www.transparency.org/pressreleases_archive/2004/ 2004.10 .20.cpi .en.html 33. http://www.bertelsmann-transformation-index.de/ 176.0 .html?&L=1 Tibor Palankai, Determining Factors of Environment of FDIs in CEE, 03/2003 The Economist, July Nauro F. [...]

[...] From 1998 unemployment and pension reforms were enacted. Latter is building up to a modern three-tier pension system, which is in deed necessary to the Estonian population as it accounts for the oldest in Europe Performance The indicators for the output strength of the economy demonstrate high, sustainable growth with a GDP per capita at PPP of 14,300 USD (2004 est)[29] and 742.2 million Euro FDI (2004)[30] and a current account deficit of of GDP. The trade balance is negative, but not overly so with exports and imports growing more or less in parallel. [...]

[...] Theories based on corporate investment analysis focus on local determinants for FDI (for example the size of the foreign market, cheap factors of production, resources and trade barriers). Strategically motivated theories of FDI give attention to the interaction with local and international competitors and the wish to increase and defend local sources. Theories of FDI that focus on portfolio aspects are based on the notion that FDI enables firms to diversify their product variety and avoid risks by spreading it over more countries (van Aarle and Skuratowicz, 2000). [...]