Ratas at conference: Faster economic growth driven by more efficient action

Prime Minister Jüri Ratas giving a speech at the 2019 Äriplaan business conference. Sept. 25, 2019.
Prime Minister Jüri Ratas giving a speech at the 2019 Äriplaan business conference. Sept. 25, 2019. Source: Government Office/Flickr

In a presentation at the 21st Äriplaan business conference on Wednesday, Prime Minister Jüri Ratas (Centre) said that the Estonian economy is capable of growing faster, but in order to do so, both entrepreneurs and the government sector need to make an effort to increase their efficiency.

Estonia's economy is facing some cooling in terms of global trends and tightening export opportunities, but its success depends primarily on its people, Ratas said according to a government press release.

"For faster growth and to take advantage of our abilities, Estonian entrepreneurs have to contribute to the increase in productivity, increasing their competitiveness, expanding activity in target markets, and selling more and for more money," he explained. "The tense situation on the labor market is directing one to address innovation, automate and digitalize its processes, and lower demand to improve its product or service. New opportunities are often born in the course of solving challenges. Next year, we will all have to make an effort to be faster, more flexible, more efficient and smarter. This includes the government sector as well."

In his speech, titled "State Business Plan 2020," Ratas stressed that the country was fully prepared to support innovation.

"The government's desire is to be an example as an innovator, to cooperate with smart entrepreneurs and also to encourage more innovation in the private sector," he said.

Plans in the works

According to the prime minister, the government's Economic Development Committee plans to discuss options for tax incentives for research and development (R&D) activities, proposals for the more efficient organization of the business doctorate, and the organization of support for enterprise implementation research for the next half year. In the first quarter of 2020, Estonia's R&D, innovation and entrepreneurship development plan 2021-2035 will also have to be completed, offering solutions for how research and entrepreneurship could best join forces.

"It is certainly a source of growth with great potential, and part of the country's business plan," he said.

Business diplomacy also plays an important role in the success of Estonian companies in export markets, he continued, noting that this is an important part of the new foreign policy development plan which still needs to reach the Session Hall of the Riigikogu this year.

State, business together on climate change

Another area in which the state and the business sector have to move forward together, according to Ratas, is the fight against climate change.

"Initial estimates suggest that reaching a climate neutral Estonia by 2050 is technically possible in cooperation between the private, public and non-profit sectors and potentially long-term returns in the case of strategically wise investments," he said. "The volume of investments needed for this is currently estimated at around €16.7 billion, €12.1 billion of which should be investments made by the private sector.

Moving toward climate neutrality, he said, will, in the long term, give Estonia the opportunity to restructure its economy and benefit from change as well as job creation.

On Tuesday, Ratas briefed entrepreneurs on the government-approved 2020 state budget and confirmed that the coalition would remain faithful to a conservative budget policy whose central pillar is the structural budget balance. In the long term, however, the flexibility of the state budget will be increased with help from a government-initiated budget revision.

"The revision provides a better overview of the state's costs and how well these goals are met," he said. "Social benefits must reach those in need, business support must accelerate economic growth, the school system must provide everyone with a good starting position in life, infrastructure investments must make movement faster and more comfortable. If it appears that some public services can be offered in better quality or in a more economical manner, changes must be made. The result will hopefully be a state budget based on the maximum of both our capabilities and our needs."


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Editor: Aili Vahtla

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