Estonia largest exporter of the Baltics (1)
While exports account for a significant portion of the economy in the Baltics, the export market is different in each of the three Baltic states. At the same time, investments and product sales between Estonia, Latvia and Lithuania have grown significantly this year.
Exports made up over two thirds of Estonia’s GDP last year, putting the northernmost Baltic state ahead of Lithuania and especially Latvia by this metric. In comparison, the share of exports in the Eurozone as a whole falls below half of the GDP.
According to SEB Group Baltic Division data, Estonia exports to Nordic countries Sweden and Finland the most, while Latvia exports primarily to Lithuania and Estonia and Lithuania to Russia and Latvia.
Estonia’s chief exports include machines, equipment and wood products.
"There are very many Swedish and Finnish businesses in Estonia today," said Riho Unt, director of the SEB Group Baltic Division, commenting on difference in the three neighboring countries’ exports. "And Ericsson, which is Estonia’s biggest exporter, affects a very large share of Estonian exports. While the wood industry is fairly large in Estonia and Latvia, Lithuania doesn’t have one; they have grains instead — its purchase and sale, its intermediation. Then there are large transport businesses and the offering of services in Europe in this sector."
Success is reliant on export in Valga County, in the Estonian-Latvian border region, one of the few places to award its own regional business awards. This year, plywood mill UPM-Kymmene Otepää won the regional Business of the Year title, while one of the most successful exporters in the county is longtime producer of wooden houses AS Ritsu.
"New markets have been very seriously developing," Ritsu owner Ants Randmaa commented to ETV’s news broadcast "Aktuaalne kaamera." "While Ritsu didn’t even really focus on Scandinavia, the Norwegian market has very significantly increased for us right now."
Rurally-based businesses nonetheless face a crucial challenge: companies located far away from large population centers have a more difficult time securing loans.
"Interest rates may be low, however as collateral value is low in Valga County, many business-owners have raised the concern regarding the securing of loans here, in the far reaches of Southeastern Estonia," said Han Heinjärv, president of the Valga County Business Club.
SEB’s bank analysis also revealed that the Baltic states’ different economic and tax policies also have a large influence on entrepreneurship and jobs.
"[Estonia has] had a right-wing government for a long time whose worldview is that there will be more promotion of private enterprise," said Unt, who noted that in Latvia and Lithuania, in comparison, the state was in a more important, elevated position. "Consequently, the focus is more on how the budget will come together and private capital must thereafter try to adapt to this. With regards to Lithuania, it is notable that state capitalism is somewhat greater there; larger businesses are state-owned and the state invests more there."
How to increase the value added of their respective exported goods, in any case, remains a key issue in all three Baltic states.