According to Toomsalu, attracting foreign investment through a more targeted approach could boost Estonia's economy.

"In my opinion, we've approached things in a consistent way, and that has served us quite well for 30 years. But if you look at any country that is wealthier than Estonia, there is no uniform approach to economic policy. What do I mean by this? We have a very simple tax system, a simple system for various subsidies, and there are very strong advantages to this. However, when looking at foreign investments for example, the way wealthier countries operate, is that they have very targeted offerings directly towards companies," Toomsalu explained.

"It's not some abstract program, but a specific company, a specific amount of support, and a very short payback period. The company makes its investments, pays taxes, hires labor, and as indirect revenues brings in expertise and everything else," Toomsalu added.

He explained that the usual counterargument against such an approach to attracting foreign investment is that the Estonian state doesn't have the required funds available. According to Toomsalu, however, this would not require huge sums, and the Estonian state actually does have the money needed.

"For example, €20 million—a relatively arbitrary example—split two or three ways, gives you €7 million or €10 million. Globally, that's also a huge amount of money to bring in for a specific investment. The examples of companies leaving Estonia are over sums of this magnitude. The Estonian state has this money. And as a counterbalance, you can always agree on what investments, how many jobs, and everything that we expect, and that can be factored into tax revenue. Honestly, it's also a very good investment in terms of pure math and the returns. We should think about this more," he said, suggesting that Estonia should fight harder.

"Fighting for it requires proactive messaging and a bit of investment. But yes, behind that is the notion that we are doing things in the same way. Wealthier countries don't do things the same way all the time," he added.

The Estonian government plans to double the size of the country's economy by 2035. Toomsalu believes that is achievable, but in addition to the long-term plan, there also needs to be substantial shorter-term plans.

"It all starts with having a plan and a vision. But at the same time, this vision includes things that entrepreneurs have been talking about for perhaps two decades. More than 80 percent of Estonia's revenue comes from labor and consumption taxes. Consumption taxes come from salaries, salaries come from companies, labor comes from companies. It all starts with companies; they have been saying exactly the same thing. Now, it has been put into the vision. [We] just need to listen and act on it," Toomsalu said.

"But this vision has one technical weakness. As we have created a similar vision for LHV – to become the largest bank here in ten years – we have been solving it in reverse, in terms of every single annual plan,  and who is responsible for that plan for the next year, according to different sectors. Namely, there could be a minister, a deadline and an action plan. Otherwise, we will be twelve years into the future without anyone responsible and so, what happens the next year, we don't know," he added.

Emerging from the crisis

According to Toomsalu, Estonia will emerge from the current economic crisis weaker than before. However, the flexibility of the labor market is a positive for the country.

"The lesson from previous crises has been that allowing the labor market to adapt quickly to needs and structural changes actually lays a good foundation. I think some fundamentals are actually sound. Of course, we depend a lot on our trading partners. But to emerge stronger, we need to change some of our thinking frameworks and become a bit more targeted in certain areas," he explained.

Toomsalu acknowledged that the economic statistics are likely to get worse at first, including for instance, the unemployment rate and the number of companies in difficulty, as this becomes apparent with little delay. However, people's economic confidence is recovering.

"But, new statistics are created by current behavior. When looking at behavioral aspects, we also looked at bank statistics and actually saw an increase in the number of different card payments and transactions. People's economic confidence has started to increase, prices have come down, which means purchasing power is beginning to recover," he said.

Toomsalu noted that history shows most crises end within a couple of years, and the light at the end of the tunnel is already visible.

"But Estonia depends on export partners and all the other factors too. What's missing a bit is vision and initiative, as well as proactiveness. Clear messages, and that will come," he added.

In response to whether Estonia ought to focus more on the service economy rather than industry in the future, Toomsalu said that a wealthy country needs both, and these sectors should not be in opposition to one another.

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