Estonia received a total of 8 billion kroons ($534 million) in
foreign investment last year, according to the United Nations' 1999
World Investment Report, released in late September. This amounts to
roughly $407 per capita.
Lithuania landed in second place, with $251 foreign investment per
capita. The Czech Repulbic, with $247 per capita, placed third.
In 1997, Estonia ranked third among Central and Eastern European
countries, behind Latvia and Hungary, but the volume of foreign
investment here more than doubled in 1998.
Poland is still the regional leader in total investment, racking up
$5.1 million worth in 1998.
Agu Remmelg, director of the Estonian Investment Agency, said the
biggest investments in Estonia were made by Swedish and Finnish
investors. Hansapank, Uhispank and the telecommunications sector
where the major recipients.
Remmelg said Nordic investors are attracted to Estonia over Lithuania
and Latvia thanks to the country's proximity to Scandinavia and
Finland. Also, Estonia's liberal economy is an advantage. For Finns,
the similar language plays a role as well.
The Estonian Investment Agency predicts 5 billion kroons' worth of
foreign investment in 1999 and foresees a continued increase over the
next couple of years thanks to the pending privatization of Estonian
Railways, the energy company Eesti Energia and Tallinna Vesi, a
"During the first half of 1999, Estonia received 2.6 billion kroons
in foreign investment, which is more than the total investments
received in 1996," Remmelg said.
Most Estonian investment projects are small on an international scale
- few, Remmelg says, exceed 1 billion kroons.
"We can say that any project larger than 100 million kroons is huge,"
he said. Estonia received 31 projects which went over the 100 million
mark in 1998.
"We are successful in the eastern part of Europe but compared to the
other countries in the Baltic Sea region we have a lot to develop,"
said Remmelg. "Most of the investments in this region go to developed
countries such as Finland, Sweden, Denmark and Norway. These
countries get two to five times more investments than Estonia."
Remmelg said the inflow of foreign investment is good for five
reasons: it helps keep the current account deficit in balance with
capital inflow, it's good for integrating into the high-tech network
of big corporations, it encourages potential investors to come to
Estonia, it leads to increased employee training; and it brings large
international corporations, most of which use more environmentally
friendly practices than local companies.