Information Technology Landscape in

ESTONIA

 

About Estonia
Infrastructure
Government Policies
IT Deregulation
Internet Diffusion
Hardware
Software
Legal Environment
E-Commerce
IT Geographics
IT Financing
IT Labor Market
Transborder Data Flow
Strengths/Weaknesses
IT Impact on Business
Sources Used
About the Author

                           IT Strength and Weaknesses

Estonia's IT sector is carefully looked after, and various developments in this sector are strongly encouraged by the government. Therefore, the country has been able to develop a number of strengths during the rather short period of its independence from the Soviet Union. However, there are still issues to be addressed and problems to be resolved in order for Estonia to continue gaining momentum in its quest to develop a true Information Society. In the SWOT analysis below, I attempted to summarize issues that are within as well as beyond Estonian government's and people's reach to address.  

 
Strengths Weaknesses Opportunities Threats
Advanced Telecommunication Infrastructure Software Piracy Problem Opportunity to Capitalize on EU experience US Economy Recession
Inexpensive Educated and Skillful Workforce Brain Drain Problem (educational and professional sectors) Advanced Neighboring Countries (Finland, Sweden) Possible Recession in the EU
IT Focused Government Policies IT Work Force Shortage Respect for IT development = more venture capital Competition from Big Foreign Companies
Developed Banking  System Including E-Banking Small Scope of IT Projects  Big Russian Market Switch of IT FDI  and VC inflows to Russia (remote threat)
Potential Availability of Venture Capital Small PC Penetration    
Relaxed FDI Regulations Underdeveloped B2C E-commerce    
Very High and Growing Internet Penetration      
B2B E-commerce Development      
Deregulated Telecommunications Sector      
 

A small size of Estonia, both financially and physically, will probably prevent it from becoming a leader of IT developments on a world-scale. However, on the regional basis, Estonia is several years ahead of its Baltic neighbors -- Latvia and Lithuania. Many suggest that the Baltic Region will most likely become a king of single economic zone. If that happens, Estonia, and especially Tallinn, taking into consideration its advanced banking and IT position, has a good chance of establishing itself as a business center of the region.

On the other hand, one cannot forget that one of the countries that Estonia borders is Russia. Even though the Russian economy is in a deep depression at the moment, possible future improvements may not be discounted. Estonia, being at the more advanced stage of development right now, should watch Russia very carefully for not to miss an opportunity to capitalize on the huge potential Russian market for its IT development and expertise. At the same time, one of the threats of the potential economic rebound in Russia for Estonia might be the possibility that the advanced countries will divert their FDI and VC to Russia in order to take advantage of even cheaper labor and scientific expertise.  

At the moment, Estonian policy on IT development is the most favorable one and it looks like it will continue to be such. Being one of the most progressive European countries in this sector and complying with the EU norms in the majority of others, Estonia has a good chance to be admitted in to the European Union rather soon. The admission in the EU seems to be a major factor that drives all governmental policies produced in the country. The real challenge for the government, however, in my opinion, will be not to loose the steam and/or focus  after Estonia has been admitted into the EU.

 

 

Last Updated 12/13/2001 by Alec Snetkov alec_snetkov@yahoo.com