Thirty years after its re-establishment of independence, Estonia has become one of the fastest growing economies in Central and Eastern Europe, and a place where quick and successful reforms, economic westernization, innovation and openness to foreign capital have attracted numerous international companies.
Estonia has attracted FDIs and enjoys some of the highest international credit ratings. Entrepreneurship indicators place Estonia in the same category as the Scandinavian countries. Its 2021 economic freedom score makes Estonia’s economy the 8th most free in the world.
Canada was Estonia’s 25th top foreign trade partner and the 9th biggest outside the European Union (EU) in 2020. Estonia’s foreign trade balance with Canada was positive. However, COVID-19 has had an instant and strong impact on bilateral trade as exports from Estonia to Canada have decreased by 25.5 per cent compared to the previous year.
Estonia’s main exports to Canada were refined petroleum products, followed by yeasts and other micro-organisms, and communication equipment. Estonia’s main imports were precious and semi-precious stones and jewelry, various food products and electrical equipment and machinery, such as wood processing machines and computers.
Today, the world is concentrated on economic recovery while being mindful of weaknesses in global trade flows and threats from disrupted supply and value chains. The pandemic challenges the role of globalization in international trade and may have already reshaped it. A growing services economy along with digital and green transformations also affect the world’s economic production and trading patterns. Post-pandemic co-operation models require a global vision.
International trade agreements provide a good framework to enhance such co-operation. The EU-Canada Comprehensive Economic and Trade Agreement (CETA) is “the most ambitious trade agreement the EU has ever concluded.” It has driven trade between EU member states and Canada since its provisional application in 2017, in spite of slowdowns in COVID.
Approximately 100 Estonian companies export to Canada, and 80 per cent of them are small- and medium-sized enterprises (SMEs.) CETA helps them reach markets and eliminate duties, provides a level playing field and sets clear and unambiguous procurement rules.
CETA also covers sustainable development and the environment, helping to achieve green transformation goals. Yet, it is about more than just trade. It could be a template for dealing with complex trade issues in a post-pandemic world.
The digitalization of society and the incorporation of new technologies and business models using the potential of information technology may become a key factor in accelerating economic growth.
Innovation and IT play a central role in the Estonian economy. Combining elements of the old and new economies helps upgrade value chains in sectors such as forestry and oil shale. This is why the European Innovation Scoreboard 2021 classifies Estonia as a strong innovator.
The digital ambitions of Canada and Estonia have much in common. Canada’s digital strategy aims to provide better digital services and improve cyber security. Estonia is already a recognized leader in digital identification, cyber security and Blockchain technology, having produced numerous innovations at government, enterprise and consumer levels. As the world stands on the doorstep of the fourth industrial revolution, it’s clear the future of the manufacturing industry depends on digital solutions, too. Estonia and Canada can work together in realizing this strategic goal of building a secure, reliable and seamless digital society and industry.
Estonia’s vibrant and welcoming startup community consists of more than 1,000 startups, including 7 unicorns. The startup community has an excellent record of successful innovations and investments, which have delivered outstanding returns to its founders and investors. That takes smart people with outstanding IT skills, and excellent entrepreneurial and competitive performance. A business-friendly environment and modern digital infrastructure create an ideal environment for innovation and testing. A compact domestic market makes the sector open to global ideas, growth and investment.
Canadian capital is welcome to be part of this ambitious ecosystem. Foreign citizens may join Estonia’s e-Residency program, which provides a government-issued digital identity and access to Estonia’s transparent business environment. E-resident entrepreneurs from all over the world can start their EU-based company and run it online without leaving their home. The Digital Nomad Visa allows remote workers to live in Estonia and work for their employer or their own company registered abroad. E-residency also serves people beyond Estonia’s borders and the Digital Nomad Visa allows people around the world to choose how they work.
At Expo 2020 in Dubai, open from Oct. 1 to March 31, 2022, Estonia will take a step forward and present a nation of tomorrow reflecting three important keywords — digital, smart and sustainable.
Toomas Lukk is Estonia’s ambassador to Canada. Reach him at (613) 789-4222 or embassy.ottawa@mfa.ee.
