Estonia´s Economic Development and the Role of External Anchors

Rünno Lumiste (University of Technology, Estonia);  Robert Pefferly (Estonian Business School), and Alari Purju (University of Technology, Estonia)

Estonia is a former socialist economy which introduced comprehensive structural and institutional reforms. The country´s transition to market economy has been enhanced by integration with the European Union (EU), which was very important in institutional evolution. The research in this paper concerns the role of external anchors upon economic development. The external anchors in this context are the mandates that reflect the values, objectives and aims of socioeconomic alliance. The EU membership is considered as one important anchor and the fulfillment of a wide set of indicators for this membership framed Estonia´s economy and political system. Estonia is still a middle-income country and for future development and reduction of the income gap vis-à-vis high-income countries, further structural changes are necessary. Information and communication technologies (ICT) and new services associated with this sector could be one source of growth. This introduces a wider question: could values related to ICT and information based innovation create external anchors? Does creating a positive image and providing support for ICT applications yield measurable development in the sector and help further the role of ITC in society? The development of Skype and its applications is one candidate for this role. New ICT tools have influenced the preferences of the younger generation regarding societal behavior and working habits and tools. The development patterns of these changes, EU integration in the past and possible ICT penetration into society in the future are discussed using methods of evolutionary economics which combines historical ingredients with the impact of external anchors as catalysts.

Keyword: Runno

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