Estonia’s business environment is one of the most competitive, not only in the EU, but the entire world. Balanced budgets, low public debt, a flat-rate income tax regime, innovative e-services, and a competitive commercial banking sector are all hallmarks of Estonia’s free market economy. Other competitive advantages include its proximity to Scandinavian markets, its strategic location between countries of eastern and western Europe, and a highly skilled labour force. Banking, information technology, telecommunications, chemical production, wood and paper, fishing, agriculture, food processing, textiles, engineering, shipbuilding, machinery, electronics, and transportation are all important sectors of a rather diversified economy.
As of 2012, Estonia remains the only euro member with a budget surplus, and with a national debt of only 6%, it is one of the least indebted countries in Europe (CNBC June 5, 2012).
Rich in natural resources, Estonia boasts considerable deposits of oil shale energy and limestone, while large tracts of forest blanket the countryside. In addition to oil shale, limestone, and timber, Estonia also has reserves of phosphorite, pitchblende, and granite, as well as significant quantities of rare earth oxides. Its farming sector benefits from a large proportion of privately held farmland – more so than the likes of Latvia, Lithuania or other former Soviet states. In turn, these private ag producers are an important contributor to a healthy food processing industry. In terms of energy, large oil shale reserves, along with a liberalized electricity market, has enabled Estonia to become a power exporting state.