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The impact of Scandinavian economies on Estonia via foreign trade and direct investments

Listed author(s):
  • Laura Ehrlich


  • Ülo Kaasik


  • Anu Randveer


Registered author(s):

    The paper focuses on the benefits, challenges and risks of the Estonian economy stemming from close relations with its main foreign partners Finland and Sweden, through foreign direct investments and foreign trade. The paper gives a short overview of Finnish and Swedish economies to provide a background for the analysis of the characteristics of FDI and trade flows between Estonia and these countries. As Estonia is a very small and open economy main benefits and challenges are related to it. The authors find that FDI from Finland and Sweden increase the credibility of Estonian economy, but as foreign investment flows are subject to push factors they have the potential of destabilising capital flows, because these two countries make over 70% of FDI into Estonia. The authors also find that the dynamics of Estonian exports to Finland and Sweden (which make more than half of total exports) is generally determined by the demand factors of those countries.

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    Paper provided by Bank of Estonia in its series Bank of Estonia Working Papers with number 2002-4.

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    Length: 27 pages
    Date of creation: 10 Nov 2002
    Date of revision: 12 Nov 2002
    Publication status: published
    Handle: RePEc:eea:boewps:wp2002-04
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    Order Information: Postal: Estonia bld. 13, 15095 Tallinn, ESTONIA

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

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    1. Hernesniemi, Hannu, 2000. "Evaluation of Estonian Innovation System," Discussion Papers 722, The Research Institute of the Finnish Economy.
    2. Paul Brenton & Francesca Di Mauro & Matthias Lücke, 1999. "Economic Integration and FDI: An Empirical Analysis of Foreign Investment in the EU and in Central and Eastern Europe," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 26(2), pages 95-121, June.
    3. Saul Estrin & Alan Bevan & Klaus Meyer, 2001. "Institution Building and the Integration of Eastern Europe in International Production," One Europe or Several? Working Papers 16, One-Europe Programme.
    4. Andres Vesilind & Laura Ehrlich, 2001. "Determinants of Estonian export of goods: an econometric analysis and comparison with Latvia and Lithuania," Bank of Estonia Working Papers 2001-1, Bank of Estonia, revised 13 Oct 2001.
    5. Bevan, Alan & Estrin, Saul, 2000. "The Determinants of Foreign Direct Investment in Transition Economies," CEPR Discussion Papers 2638, C.E.P.R. Discussion Papers.
    6. Alan A. Bevan & Saul Estrin, 2000. "The Determinants of Foreign Direct Investment in Transition Economies," William Davidson Institute Working Papers Series 342, William Davidson Institute at the University of Michigan.
    7. J. Hatzius, 1997. "Foreign direct investment," LSE Research Online Documents on Economics 20351, London School of Economics and Political Science, LSE Library.
    8. Philip Stevens, 2002. "The Role of Efficiency as an Explanation of International Income Differences," NIESR Discussion Papers 205, National Institute of Economic and Social Research.
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