Estonia

Estonia scores an Economic Competitiveness rank of 30th, but due to low scores on several social indicators manages only 53rd place for Comparative Liveability. Overall, the country ties with Uruguay for 36th place.

Since the beginning of its economic transition, Estonia has performed outstandingly. Through openness and good governance, the country has attracted foreign direct investment, enabled international trade, and successfully promoted local entrepreneurship.

Mass education figures are not as strong as in other countries in the region, with less than three years’ secondary education on average per worker. Nonetheless, Estonia hosts a stock of $13 billion foreign direct investment, and export volume exceeds $10 billion annually.

Consequently, foreign investment and trade total more than 130% of Estonia’s GDP. Government effectiveness and regulatory quality are also outstanding and foster high levels of capital investment. In another indicator of the quality of regulation, the costs of starting a business are low. Despite this success in trade, the commercialisation of innovation has lagged behind, as illustrated by the low number of patents awarded.

However, Estonia’s rapid success has not come without risks. Through a currency board arrangement Estonia chose a unique path to Euro adoption, which provided an inflexible exchange rate mechanism. Although this system initially achieved a stable economy and rapid growth, challenges have recently started to emerge, as Estonia faces difficulties from domestic inflation and a soaring current account deficit. Perhaps partially as a result, the competitiveness indicator score is very low.

The indicators of Comparative Liveability present a mixed picture. Although political life and employment conditions are favourable, a number of other indicators for Comparative Liveability reduce Estonia’s overall ranking, with the health, family, and religious life measures all scoring significantly below regional averages. A mere 65%^g of the population is satisfied with their personal health conditions and the share of widowed and divorced are both over 10%^g. The cold climate is also a difficulty for those without the means to afford adequate housing or heating.

As in many Eastern European countries, community life scores are weak. Community life has also been affected by deteriorating relations between Estonians and Russians, as ethnic tensions have been repeatedly exploited for political purposes in recent years. Very few people report engaging in volunteer work or charitable giving, with just over 10%^g of people saying they have given money in the previous month, according to the Gallup World Poll.