The economy of Estonia is an advanced economy, and the country is a member of the European Union and the eurozone. Estonia’s economy is heavily influenced by developments in the Finnish and Swedish economies.
Before the Second World War, Estonia’s economy was based on agriculture, but there was a significant knowledge sector, with the university city of Tartu known for scientific contributions and a growing industrial sector similar to that of neighbouring Finland. Products such as butter, milk, and cheese were widely known in the Western European markets.
The main markets were Germany and the United Kingdom, and only 3% of all commerce was with the neighbouring USSR. Estonia and Finland had relatively similar standards of living.
The country has been quickly catching up with the EU-15; its GDP per capita has grown from 34.8% of the EU-15 average in 1996 to 65% in 2007, similar to that of Central European countries.
It is already rated a high-income country by the World Bank. The GDP (PPP) per capita of the country, a good indicator of wealth, was $35,974 in 2018, according to the World Bank, between that of Lithuania and Cyprus but below that of most long-time EU members such as Spain or Italy.
Because of its economic performance after regaining independence in 1991, Estonia has been termed one of the Baltic Tigers. With a population of just over 1.3 million, it is one of the least populous members of the European Union, the Eurozone, the OECD, the Schengen Area, and NATO. Estonia has consistently ranked highly in international rankings for quality of life, education, press freedom, digitalization of public services, and technology companies’ prevalence.
SMEs play a vital role in Estonia’s ‘non-financial business economy’. They generate 78.2% of total value added and 79.5% of total employment, well above the respective EU averages of 56.4% and 66.6%.
Estonian SMEs employ 4.5 people on average, slightly higher than the EU average of 3.9. Like most EU countries, the most significant SME sectors are wholesale, retail trade, and manufacturing.
The average productivity of Estonian SMEs, calculated as value added per person employed, is around €30,600, 31.4% lower than in the EU as a whole.
In entrepreneurship, Estonia is among the best-performing countries in the EU. It has developed a highly dynamic ecosystem for start-ups, scale-ups, and high-tech SMEs, supported by a special public agency, ‘Start-up Estonia’ and several early-stage investment funds with public participation.
Substantial progress has also been made recently in SMEs’ uptake of digital technologies. According to Statistics Estonia, in 2020, nearly 99% of all Estonian businesses have an internet connection and a website, 57% use paid cloud computing services, 16% use the internet of things, and 9% analyze and work with big data.
Estonia (Republic of Estonia)
Eastern European Time (UTC+2/+3 with DST)
1 January – 31 December (calendar year)
National Minimum Wage:
EUR 725/month (January 2023)
Taxpayer Identification Numbers:
Personal Identity Code (Isikukood) – 11-digits code.
8 numbers registration code for legal persons (starting with 1 for public limited company, private limited company, general partnership, limited partnership and commercial association).
Main trading partners:
Main customers: Finland, Sweden, Russia, Latvia and United States.Main suppliers: Russia, Germany, Finland, Latvia and Lithuania.