The impact of Scandinavian economies on Estonia via foreign trade and direct investments
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.
|Date of creation:||10 Nov 2002|
|Date of revision:||12 Nov 2002|
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References listed on IDEAS
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- Brenton, Paul & DiMauro, Francesca & Lücke, Matthias, 1998.
"Economic integration and FDI: an empirical analysis of foreign investment in the EU and in Central and Eastern Europe,"
Kiel Working Papers
890, Kiel Institute for the World Economy.
- Paul Brenton & Francesca Di Mauro & Matthias LÃ¼cke, 1999. "Economic Integration and FDI: An Empirical Analysis of Foreign Investment in the EU and in Central and Eastern Europe," Empirica, Springer, vol. 26(2), pages 95-121, June.
- J. Hatzius, 1997. "Foreign direct investment," LSE Research Online Documents on Economics 20351, London School of Economics and Political Science, LSE Library.
- 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.
- n/a, 2002. "The Role of Efficiency as an Explanation of International Income Differences," NIESR Discussion Papers 137, National Institute of Economic and Social Research.
- 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.
- Bevan, Alan & Estrin, Saul, 2000. "The Determinants of Foreign Direct Investment in Transition Economies," CEPR Discussion Papers 2638, C.E.P.R. Discussion Papers.
- 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.
- Hernesniemi, Hannu, 2000. "Evaluation of Estonian Innovation System," Discussion Papers 722, The Research Institute of the Finnish Economy.
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