Innovation and Entrepreneurship in New Europe
Edited by Ruta Aidis and Friederike Welter
Chapter 4: Regio – A ‘Learned-Global’ Knowledge Company: A Case from Estonia
Tõnis Mets INTRODUCTION The history of modern entrepreneurship in Estonia started with the transition of the economy after 1991. The disastrous eﬀects of the 1940–91 Soviet heritage become evident if we compare the fate of Estonia to that of its neighbouring country, Finland. In 1940, Estonia and Finland were economically at the same level, but ‘according to estimates in 1988, per capita household income was 6 times higher in Finland than in Estonia’ (Laar 2004, pp. 4–5). The reason for that was that Estonia had suﬀered massive Russiﬁcation and a drop in the share of Estonians in the population from 97 to 60 per cent during the Soviet period (Adamson 2002) – clear proof that the indigenous people had lost control over their own territory and fate. This meant that when Estonia regained independence in 1991, its starting position was far behind that of developed Western countries located in its neighbouring regions around the Baltic Sea. In 1992, the Estonian government embarked on a liberal economic policy, which is sometimes also referred to as ‘shock therapy’, and opened the Estonian market to foreign goods and capital. A large-scale campaign of privatization took place, resulting in the collapse of those industries that were not able to adjust to the new economic environment, and leading to a high rate of unemployment for a comparatively long period. This liberal policy supported the inﬂow of foreign direct investment (FDI), which reached US$4684 per capita (the highest among...
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