Estonia’s regions: Between neglect and opportunity ({{commentsTotal}})

The Red Tower in Pärnu. Pärnu is trying to diversify its economy and investing in sectors other than tourism.
The Red Tower in Pärnu. Pärnu is trying to diversify its economy and investing in sectors other than tourism. Source: (Wikimedia Commons)

One of the highlights of this year’s “Password” marketing conference in Tallinn was a panel on the economic challenges and promise of Estonia’s regions. Just half an hour long, it provided a good overview of the issues and developments facing the local economies outside the capital.

Erik Gamzejev, editor-in-chief of local paper Põhjarannik, gave an overview of the situation in Ida-Viru County in the east. Mayor of Pärnu Romek Kosenkranius talked about his city’s struggle with seasonality and its geography, and mayor of Tõrva Maido Ruusmann talked about the challenges facing the town and region.

Locals need to be taken into account: Ida-Viru County

Ida-Viru County has a population of just over 146,000, which makes it Estonia’s third most populated area just ahead of Tartu County. Stereotypical beliefs about the area include seemingly unstoppable economic decline, a very low number of ethnic Estonians, and outdated and failing industries.

Erik Gamzejev points out that there have been positive developments as well: For instance, the number of tourists staying in Ida-Virumaa is going up, not down.

Asked about the “myths” surrounding the county, he also said that the number of ethnic Estonians in the area at some 30,000 was actually bigger than most people expected, amounting to just over 20 percent of the population. Yes, Russian was the dominant language, but the area was a far cry from completely disconnected from the rest of the country.

One important thing for businesses to realize was that the Russian-speakers in Ida-Viru County belonged to a language area that was much bigger than that of Estonian, Gamzejev stressed. For just a few euros a month, a Russian-speaker in Narva could subscribe to some 80 TV channels in their own language.

Anyone doing marketing in the area needed to take this into account, as it was nearly impossible to be sure that e.g. a TV campaign would reach a broader public. Virtually the only way to reach people was to go local in terms of advertising and publicity. The good news was that locals were interested in what was going on in their community.

The language barrier was an issue. But if a company addressed the locals in a language they understood, and did so in a place familiar and visible to them, they could absolutely be reached, Gamzejev suggested.

He also said that the locals were ready to use the connections available to them, and go to other parts of Estonia to attend concerts and so on, but that the amount of events and entertainment available in other parts of the country actually advertised to people in Ida-Virumaa was very low.

Regions need to be diverse and flexible: Pärnu

According to Pärnu mayor Romek Kosenkranius, his region receives some 1.1 million visitors every year, counting those who stay for at least 24 hours. 339,000 of them stay longer, for an average of three nights. They spend some €22 million euros in the region every year.

The actual amount spent might be even higher, as during the busiest weekends in summer there was a lot of tenting on private people’s land, which meant income from tourism that in most cases did not get reported.

One painful lesson of the post-2008 economic downturn had been that concentrating mainly on tourism was a problem, Kosenkranius said. They faced the problem every year of a run on the city for about three months during summer, and a slow remainder of the year. This could become so acute that for example during the time of the city’s Weekend Festival, supermarkets were completely sold out.

This seasonal aspect of the region’s economy had prompted the local council to invest more than €60 million for the sake of other business areas, including the local industry.

Another challenge was that the population’s increasing spending power had brought with it higher expectations. Local businesses found it difficult to offer a choice comparable to that of the shops in Tallinn and Riga, in part due to their unstable annual business. And as the Latvian capital was close, people often chose to go there to do their shopping, Kosenkranius said.

Regions not only looking to Tallinn: Tõrva, South Estonia

Maido Ruusmann, beyond his role as mayor of Tõrva, also presides over the historic and cultural area of Mulgimaa, which spans several municipalities and counties in South Estonia. What he can see is that several centers outside the area attract people and tend to make them spend their money there.

Rather than Tartu, it was in fact the Lõunakeskus shopping center on the fringe of Estonia’s second-largest city that attracted a lot of people, Ruusmann said. The only phenomenon that had recently managed to work against this trend was e-commerce, as thanks to a good network of parcel distribution stations simply ordering things online had become a comfortable alternative.

An important effect of this was that there was now less of a reason to leave because things were not available in the area, Ruusmann said. And just like in the case of Ida-Virumaa, their region had good news as well—recently, more people had moved there than had left.

There aren’t only downsides to living away from the capital. One example is the proximity of the Mulgimaa region to Riga. Interestingly, someone living close to the Latvian border actually has access to an airport with plenty more direct flights than someone living just outside Tallinn.

One way Ruusmann sees to work against marginalization is to actively market their own region, for example by working together with different companies. One of them is Nordica, Estonia’s national airline. Its passengers can eat one of the area’s very typical new products, Mulgi Krõpsud—chips made out of a variety of vegetables.

Future: e-commerce, better connections, better marketing

It seems, then, that the economic future of Estonia’s regions depends on their ability to inject themselves into people’s minds as much as on companies’ ability to advertise and sell there.

Cross-border shopping, for instance, could be kept at bay by putting greater emphasis on the quality and origin of Estonian products. According to Põhjarannik’s Erik Gamzejev, despite there being plenty of cheaper goods available from Russia, the residents of Ida-Viru County still prefer those of Estonian origin, because they know what they are getting.

This actually fits in with the direction of the rest of the country, as it has been part of the debate surrounding the new national brand to establish Estonia as a country that produces at a very high level of quality.

As Ruusmann points out, e-commerce can make products available to people in more remote regions that they would otherwise travel or even move for, and could thus work against emigration from rural areas. Services otherwise available only in regional centers or in the capital can be provided online, so that there is no disadvantage in being farther away.

With goods and services supplied this way, the well-known argument of clean air, the quiet life, and the safer living environment the regions have to offer could become a very serious advantage in the future, and attract tourists as well as permanent residents.

Editor: Dario Cavegn



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