The Economic Activity of Estonia
Estonian economy ranks 13th in the Heritage Foundation’s 2009 Economic Freedom Index and it is also tagged as one of the most liberal economies of the world. This recognition is attributed to the country’s strong and balanced budget, flat-rate income tax system (remarkably, the first in the world), competitive commercial banking sector, a fully convertible currency that is pegged to Euro, and a very attractive and rewarding environment for foreign investors. For the record, reinvested corporate profits are not liable for tax unless a distribution is done.
Among most EU members, Estonia manages to foster an exceptionally strong growth in its economic policies and macroeconomic stability resulting to better living standards. Its GDP reached its peak of 8% in 2000 but the economy is gradually cooling off because in succeeding years, 2007 and 2009, the GDP growth is 6.3% and 3.6% respectively.
Estonia’s business relations with the United States show positive signs wherein a total of $392 million has been exported to the United States in 2008 alone. Mineral fuels, oils, machineries, sports and games equipment, and fertilizers are the primary products imported from Estonia.
Moreover, the electronics and telecommunications industries of Estonia are the primary force in driving the economy to its full shape. Wireless connections in bars and cafes are a common service. Estonian developers designed Skype to offer free calls over the Internet to millions of people across the globe. The economy is also boosted by its tourism sector as people flock in beautiful Talinn, a major Baltic landmark among tourists.