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Snapshots on Estonian economic development and innovation potential

Snapshots on Estonian economic development and innovation potential. Ain Aaviksoo, MD MPH Praxis Centre for Policy Studies Member of Executive Board November 22, 2010. Challenges in 2003 as pointed out by Praxis.

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Snapshots on Estonian economic development and innovation potential

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  1. Snapshots on Estonianeconomicdevelopment and innovationpotential Ain Aaviksoo, MD MPH Praxis Centre for Policy Studies Member of Executive Board November 22, 2010

  2. Challengesin 2003 aspointedoutby Praxis • In order toraise the competitivenessof the economyitiscrucialtoobtain the highestpossibleriseinproductivityin the industrialsectoras the technologydrivenrisein the productivityofagricultural and servicessectorscanonlybemuchmorelimited. • The specialisationof the Estonianindustry on labour and resourceintensivefieldsindicatesanimminentthreatof a lock-into a lowincomelevel. • M Tiits, R Kattel, T Kalvet, R Kaarli. „Competitiveness and FutureOutlooksof the EstonianEconomy“. Research and DevelopmentCouncil (2003)

  3. Labourproductivity & real wagegrowthhasnotbeen the strongest side of Estonia(%, yearlyperiodiccomparison) Source: M of Financial Affairs, 2009 Source: Eurostat

  4. Unemploymentisashighasitcanbe... Source: Statistics Estonia

  5. The worstisover, but ... Nominal GDP by quarter Source: Statistics Estonia (2010)

  6. Estonian enterprises are relativelyinnovative Source: Statistics Estonia (2010)

  7. R&D investmentstructurein EU countries (2008 orlatest) Source: Eurostat

  8. R&D employees are increasinginenterprisesector

  9. Tax policy – 2 recent projectsby Praxis • Feasibility of zero tax rate on corporate retained earnings. (by MoF) • Results to be published very soon • The analysis of tax measures to promote research and development activities in Estonia. (MoEA&C; Praxis + KPMG)

  10. Fiscalpolicy and publicfinance - recommendations • Most of the tax burden is on consuption (slightly regressive) and labour (slightly progressive). • Tax burden on corporate income is the lowest in EU. • Real estate or motor vehicle tax - should be discussed. • Tax incentives for education and R&D are advised since they have proven to be efficient. • Fiscal policy and public finance are very procyclical, i.e. little or no macroeconomic stabilisation. Discussion is needed.

  11. HighlightsfromHumanDevelopmentReport • Main strategicchallengeiseducation: • Highproportionofuniversity-leveleducated • Inefficientfinancingofuniversities • Increasing, yetstilllowlifelonglearningparticipation(10% in EE vs 30% in DEN) • Earlysocio-economicsegregationand unequalaccesstohighereducation • Too manytoo smallmunicipalitieshindereducational reform – no politicalwillinsighttochangeit Estonia is different! Source: H Vitsur in “Estonian Human Development Report 2009”

  12. Moreinformation ain.aaviksoo@praxis.ee annika.uudelepp@praxis.ee www.praxis.ee • Comingin 2011 • Election programmes’ feasibilityevaluation • Sustainabilityofsocialsecuritysystems • Praxis endowmentfundestablished Thankyou!

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