Estonia lies along the Baltic Sea,
just south of Finland and has a climate of icy, snowy
winters and long light summers. It is a country about
the same size as the Netherlands, and is sparsely
populated with around 1.4m people. Tallinn, Estonia’s
capital city, is about 80 km or 50 miles south of
Helsinki, across the Gulf of Finland. Sweden is Estonia's
western neighbour across the Baltic. Russia lies to
the east, Latvia to the south.
The country is mostly flat, with many
lakes and islands although in the south there are
rolling hills and skiing is possible in towns like
Otepää. In the east of Estonia, lake Peipus, the 4th
largest lake in Europe, forms a natural frontier with
Russia. On the Western Coast, the islands and islets
have been designated a UNESCO Biosphere Reserve and
are a mecca for Estonians and tourists alike during
the summer. Across Estonia, much of the land is farmed
or forested, with industrial production concentrated
around Tallinn and in the Northeast.
Tallinn is an important port and one
of the best preserved medieval cities in Europe. It
is a city of grey towers topped with red tiles, of
stone stairs beneath arching gateways, of narrow winding
streets, cobbled pavement and towering ramparts. Outside
the capital, other notable towns include Tartu, an
ancient university town in the south-east, Narva with
its imposing fortress on the border with Russia in
the north and Pärnu with its attractive beach in the
The independent Republic of Estonia
was born in the aftermath of the First World War in
1918. It was subsequently occupied by the Soviet Union
(1940-41, 1944-1991) and Nazi Germany (1941-1944).
A resurgence of Estonian national identity
began in the late 1980s. The most visible (but peaceful)
protests occurred in 1988 when large numbers of Estonians
came together to sing national songs in the so-called
"singing revolution" and in 1989 when people across
all three Baltic countries joined hands together to
form a massive human chain.
In 1991, Estonia declared the restoration
of its independence which was quickly recognised by
other countries. Since then, Estonian Governments
have pursued a liberal free-trade policy and have
embraced new technologies which has resulted in a
rapid transformation to a market economy. In November
2001, Mr Arnold Rűűtel replaced Mr Lennart
Meri as only the second President that Estonia has
had since independence.
In Estonia, the transition from a planned
economy to a market economy started at the beginning
of the 1990s. Reforms carried out after monetary reform
in 1992 were comprehensive and systematic.
In June 1992, the Estonian national
currency was taken into use and became the legal currency
of Estonia. Monetary stability was one of the most
important preconditions for carrying out reforms in
other areas. Most prices were liberalised by 1992,
the government only maintains control over the price
of energy, certain services and rents.
In order to restructure the business
sector, an appropriate legal framework was established
and privatisation process launched. Estonia’s
success in attracting foreign investment has been
a continuous feature of the transition process.
As a result of the transition to a
new economic system, Estonia’s gross domestic
product (GDP) decreased sharply in the years 1991-1994.
By 1995, the recession phase was over. Economic growth
was fastest in 1997. Due to a crisis in the financial
sector, foreign demand began to decline in 1998. The
same year saw a crisis in the Russian market, and
as a result, Estonia’s GDP decreased by 1.1%
In 2000, the growth rate of Estonia’s
economy increased rapidly to 6%, driven by economic
integration with EU member states. This high rate
of growth has continued in 2001. Important exports
are machinery and electrical equipment, wood and textiles
products. Tourism and transit trade also make important
contributions to the economy. Finland and Sweden are
amongst Estonia’s biggest partners in business,
investment and tourism.