Estonia’s Geography and Economic System

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Table of Contents

Introduction
State’s Geography Influence
State’s Economic System’s Impact
Conclusion
References

Introduction

Located in Eastern Europe, Estonia is a country that is a member of the European Union (EU). There are approximately 1,500 islands in the state, along with bays, straits, and inlets (Taylor 2020). The mainland is relatively plain and densely vegetated, and its neighbors include the Gulf of Finland, Latvia, Russia, and the Baltic Sea. The administration system is a parliamentary democracy, with the president serving as the leader of the state and the prime minister as the leader of the government (Taylor 2020). The advancement of Finland and Sweden’s economies has significantly impacted Estonia’s industrialized economy. This essay focuses on the influence of Estonia’s geography and economic system on its domestic political situation.

State’s Geography Influence

The geography of Estonia is relatively flat, which was substantially shaped by glacial activity. The flat landscape in the state benefits the residents as it is easy for road and railway construction. Due to the efficient transportation in Estonia, the cost of moving individuals and commodities is reduced, raising economic output (Shamtsyan et al. 2022). The country is in the path of air currents carried by cyclonic breezes, which come from the North Atlantic Ocean and bring cool air in the summer and warm wind in the winter (Boman 2019). There is no disease load in Estonia because of the country’s good environment. Behavioral risks, such as drinking alcohol and smoking, are to blame for most diseases in the nation (Habicht et al. 2018). Moreover, the favorable climate in the region is beneficial to the high production of food. A robust agricultural system advances society by boosting output, employment, and income.

Following a covert agreement between Nazi Germany and the Soviet Union to divide Europe into spheres of influence, Estonia became a socialist state. During Germany’s unexpected onslaught on the Soviet Union (USSR) in June 1941, Estonia was used as a battlefield by the Nazi and Soviet troops (Taagepera 2018). The Estonian government had to make political decisions in response to the geography and ambitions of the majority of its inhabitants to integrate into the Euro-Atlantic societal structure after the dissolution of the USSR and the restoration of national sovereignty. The Government of Estonia welcomed the concept of becoming a member of NATO, the European Union, and eventually the Eurozone based on its history and Nordic-Teutonic heritage (Makarychev and Sazonov 2021). Joining the EU and NATO helped Estonia strengthen its national security and defense.

State’s Economic System’s Impact

Economic situations frequently influence government decisions to adopt new policies. After thirty-one years of independence, Estonia now has a very high level of government integrity, complete respect, and protection of property rights (Makarychev and Sazonov 2021). In addition, the state has a reasonable tax burden, moderate government spending, strong trade investment, and a sizable degree of financial independence, which is not bad for a nation that has practiced state socialism for nearly fifty years (Taagepera 2018). Estonia was able to excel on a national and worldwide level in various disciplines because of cheap taxes and significant expenditures on people (and their freedom), services, and infrastructure. Economic change and foreign direct investment (FDI) were vital for Estonia’s prosperity. The country’s history demonstrates how liberalism and people’s empowerment can accomplish and what emerges when citizens control their destiny on a social and economic level.

For many years, freedom from the Soviet Union appeared like a distant fantasy for Estonia as it suffered during both Communism and National Socialism. In Estonia, a constrictive and state-directed economic-trade mercantilist system existed during the USSR period. Estonia enjoyed economic prosperity before World War II, particularly as an agricultural nation (Makarychev and Sazonov 2021). The country was a part of the centrally controlled economy of the Soviet Union, which comprised nationalized farmland, businesses, and factories. On the other hand, the corrupt authoritarian government hindered economic growth by raising prices and degrading the standard of institutions (Pettai 2021). The Estonian population’s income and consumption levels have decreased, significantly reducing their trust in the nation’s development.

Estonia began its economic transformation and openness after the Soviet Union era. Along with expanding its trade opportunities, the nation actively deepened its social, economic, political, and cultural links to the EU through liberalization. However, after gaining independence, Estonia went through a financial catastrophe and had 90% inflation (Pettai 2021). The shift from a state-oriented to a free-market system was difficult for the nation and the area. Fortunately, by 1996, the revival was undeniably underway as the gross domestic product (GDP) increased by 4.90%, and inflation decreased (Pettai 2021). Estonia had the confidence to start employing pro-free market reforms. While many nations nowadays are hesitant to pursue liberal reforms, Estonia was ready to accomplish it a few years after the Soviet Union’s control.

Conclusion

In conclusion, Estonia’s geography and economic system play a significant role in influencing its domestic situation. Due to its geographical location, Estonia served as a battleground for soldiers under the rule of the Soviet Union. As a result, the region’s economy suffered greatly, and the locals fell into abject poverty. After independence, Estonia abolished the mercantilist and constrictive USSR system and switched to a free-market economy. In order to increase export, Estonia has prioritized the internal market’s strengthening and the development of local businesses. The secrets to Estonia’s success on the international scene are openness and the execution of innovative ideas.

References

Boman, Bjorn. “What makes Estonia and Singapore so good?” Globalization, Society and Education 18, no. 2 (2019): 181-193. Web.

Habicht, Triin et al. “Estonia: Health system review.” Health Systems in Transition 20, no. 1 (2018): 45-72. Web.

Makarychev, Andrey, and Sazonov, Vladimir. 2021. Populisms, popular geopolitics and the politics of belonging in Estonia. Routledge

Pettai, Vello. “National identity and re-identity in post-Soviet Estonia.” Journal of Baltic Studies 52, no. 3 (2021): 425-436. Web.

Shamtsyan, Mark et al. “Food, nutrition and health in Lithuania and Estonia.” Nutritional and Health Aspects of Traditional and Ethnic Foods of Eastern Europe 4, no. 9 (2022): 147-158. Web.

Taagepera, Rein. 2018. Estonia: Return to independence. Routledge, New York.

Taylor, Neil. 2020. Estonia: A modern history. Hurst & Company, London.

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Estonia’s Geography and Economic System

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