[Marxism] Estonia and foreign direct investment

Joonas Laine jjonas at nic.fi
Tue Jul 8 22:46:15 MDT 2008


Being interested in the relationship of Finland and Estonia, I had a
look at the Estonian national bank's (Eesti Pank) website for some
statistical information on investment flows.

I'm no accounts expert, so I might have misread something, or anyway
overestimated the phenomenon, but anyway here goes. My hunch was that,
as with much of EU enlargening to the east, it's been an integration on
terms of Western European capital. I haven't heard of any stories of
Czech capital taking over German companies, for example.

(If the links don't work, the information can be found at
http://www.eestipank.info/frontpage/en/ -> statistical indicators.)

Anyway I hope someone will point it out if I made any mistakes.

The following chart shows and during all the visible quarters (3/2006 -
1/2008) Estonia has paid more dividends out of the country than the
other way around. The numbers are in millions of kroon. (1 euro is 15,6
kroon.)

Investment income inflow and outflow by countries
<http://tinyurl.com/6qrlms>

3/2006: -3,615.6
4/2006: -3,872.2
1/2007: -6,001.1
2/2007: -4,710.3
3/2007: -5,442.1
4/2007: -5,296.8
1/2008: -5,606.0

During the first quarter of 2008 the top two countries of profit-making
in Estonia were Sweden (-4,434.4 net) and Finland (-1,104.3 net). The
biggest profits were in banking ("financial intermediation") and
manufacture. <http://tinyurl.com/5apgcu>

The following chart deals with foreign direct investment (FDI) in
Estonia. The numbers are in thousands of kroon.

Direct investment inflow and outflow by countries
<http://tinyurl.com/2pg2hr>

3/2005: 3,452,140
4/2005: -2,831,286
1/2006: 6,125,366
2/2006: -436,138
3/2006: 1,015,528
4:2006: 1,872,716
1/2007: 5,376,868
2/2007: 408,456
3/2007: 1,515,510
4/2007: 5,368,261
1/2008: 4,314,864

If you take total Estonian investments abroad and deduct total foreign
investment in Estonia from it, you get the country's international
investment position. The numbers are in millions of kroon:

3. Annual indicators of Estonian economy
13.1. International investment position (EEK mln)
<http://tinyurl.com/rk4v9>

1997: -24,547.1
1998: -28,851.6
1999: -43,324.2
2000: -46,412.2
2001: -52,710.1
2002: -65,866.8
2003: -89,857.2
2004: -129,663.1
2005: -148,374.7
2006: -152,200.9
2007: -179,559.0

It seems that as the number goes further in the negative, the grip of
foreign - especially Swedish and Finnish - capital on the country
tightens. The mentioned two countries control 2/3 of all foreign
investment in Estonia. The numbers in thousands of kroon:

Direct investment position by countries
<http://tinyurl.com/6puq83>

Swedish investments in Estonia as of 31.3.2008: 73,418,032 (40% of all FDI!)
Finland: 42,115,355 (22,9%)
Netherlands: 11,815,477 (6,4%)
Denmark: 8,561,403 (4,7%)

...

Here's an article from 2000 that seems to confirm my hunch.. Estonia
joined the EU only in 2004, but I doubt that has changed the direction
of development.

Estonia for Sale
Mel Huang
18 November 2000
http://www.pecina.cz/files/www.ce-review.org/00/40/amber40.html

Being close neighbours of the Scandinavian countries has been a godsend
for Estonia in its integration with the global economy. Trade with
Finland and Sweden accounts for easily two-thirds of all export and
import, and the two newer EU members provide Estonia much knowledge and
expertise in restructuring of industries and integration into the EU.

Investments from the two countries also play a vital role in the dynamic
restructuring of the Estonian economy, which went from stagnancy to
becoming the so-called "Baltic Tiger," with one of the strongest GDP
growth rates on the continent for most of the past five years.

The presence is nearly universal. Sector after sector has experienced
large-scale investments from the two Nordic EU members, ranging from
heavy industry to energy, from textiles to banking. The involvement is
so far-reaching and cross-sector that Estonian officials often joke that
the country has become the backyard of Finland and Sweden—much to the
annoyance of Estonia's southern Baltic neighbours.

[..]




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