Economic development

Key objectives of the Employers’ Manifesto chapter on economic development

1. ESTONIA NEEDS A LONG-TERM ENVIRONMENT FAVOURABLE FOR RURAL DEVELOPMENT (administrative burden, external connections, etc.).
2. INCREASING PRODUCTIVITY IS KEY FOR OUR BUSINESS SECTOR
3. THE SHARE OF THE STATE IN THE ECONOMY MUST BE REDUCED

Reform Party

1. Creating an environment supportive of economic development is strongly embedded in the programme: digitisation of the state, external connections, electricity and internet, tax environment, etc., empowering and motivating local authorities.
2. Raising productivity generally is within and supported by the education chapter. Specifically, the manifesto includes a proposal to: R&D to at least 1% of GDP, applied research and product development.
3. Healthy section: MORE COUNTRIES IN THE COUNTRY. Including a plan to reduce the number of government employees by at least 4,000 in 4 years.

Social Democratic Party

1. They promise less bureaucracy, a better environment for business and investment, and more incentives and rights for local authorities. No description of comprehensive state reform – no views on health care, education and general state apparatus.
2. Explicitly includes a target to raise R&D spending to 1% of GDP. Innovation component strong, but education and labour weak.
3. “In order to ensure Estonia’s attractiveness for private investors and to increase competition, the state should do as little as is strictly necessary. Each decision to privatise a state-owned company should be assessed on its own merits, but state intervention is only justified if competition has not emerged in an area and there is a market failure.”

Estonia 200

1. The programme includes: cutting red tape, valuing local businesses, the “world’s best business environment”, personalised service and a one-door policy for entrepreneurs, a proper description of the state reform.
2. The programme is more visionary than the others, but includes a proper roadmap for both the long term and the next electoral cycle. “In the economy of the future, the competitiveness of countries will be based on a smart and educated workforce, connections within the country and with the rest of the world, and access to capital – these are our priorities.” Sustainable use of natural resources and wise valuing are strongly embedded.
3. Partly inside: “We aim at a substantial consolidation, liquidation or transfer of the functions performed by trusts established by or with the participation of the State and financed from the State budget, which predominantly perform public functions, to the private sector.”

Freedom Party

1. Mention cutting red tape, business-friendly tax regime, tax burden below 33% of GDP (same in Manifesto).
2. At the heart of the service economy. They mention the need for innovation in general, support for export-oriented R&D activities, the need to balance environmental protection and the economy, support for exports, ICT retraining, etc. “The party considers it essential to radically reform the business funding structures (EAS, etc.) and bring them under a single management. In the longer term, and in view of the decline in EU funding, we believe it is right to transform it into a Norwegian Petroleum Fund-style strategic investment fund, which would receive a certain amount of its income from royalties on natural resources and make investments to improve Estonia’s living and business environment and regional development.”
3. Identify the principles when the state should be involved in business (infrastructure, strategic risk) and consider that an economic policy audit of state-owned enterprises is necessary to identify which EVs would make sense to privatise.

Fatherland

1. Cite as values free market economy, business environment, stable money, low taxes, minimum government regulation, etc. A concise national reform plan in the programme, including taking into account the proposals of the National Reform SA.
2. Mention the need to invest in education, science, technology and production. Public R&D investment target within 1% of GDP.
3. “/…/ privatise state-owned enterprises or their holdings, transfer the provision of state services to the private and third sector where possible.”

EKRE

1. Pledge to work with businesses to identify the 25 most costly and bureaucratic laws or regulations and repeal or reform them to make the business environment more business-friendly. On infrastructure, they will focus on inland waterways and want to end Rail Baltic but build a completely new rail link to Europe. Promise the cheapest energy prices in the region.
2. Research investment at 2% of GDP, no applied part, several promises would tend to reduce productivity: regional tax breaks, preference for Estonian capital-based companies in public procurement, trend towards protectionism.
3. Retrieved from

Greens

1. Quite a lot of the pledges include additional regulation and restrictions in some new area.
2. In oil shale, public R&D support for sustainable industries. Aim to bring research funding to one per cent of GDP and to three per cent over the next 10 years.
3. Retrieved from

Centre Party

1. Mention cutting red tape, supporting exports through participation in EXPO, increasing visibility of representations, etc., consider creating a post of Minister for Foreign Trade. On more specific issues on infrastructure, external relations inside. Support a review of the state budget.
2. Includes a proposal to raise public R&D funding to 1% of GDP and private R&D funding to 2% of GDP, the application of scientific achievements, strategic planning in forestry and the valorisation of Estonian raw materials, increasing the share of technical education, an innovation component in public procurement. Establishment of a world-class research centre.
3. No state involvement in the economy.

Summary

Among the themes of the Employers’ Manifesto, innovation and increasing the state’s contribution to R&D investment are better represented in the programmes (Reform, Sotsii, Eesti 200, Isamaa and Keskerakond). Similarly, reducing the financial burden or making the business environment more attractive are mentioned at least in general terms by all the major parties. In the Sotsii programme, scepticism about the latter is heightened by the fact that a number of social services are to be extended, including the extension of health insurance and unemployment insurance cover and the creation of insurance against occupational accidents and illnesses, but the sources of funding are not mentioned. Eesti 200 and Reform see the solution to health problems rather in raising awareness and ownership, and the key to increasing well-being in raising people’s own competitiveness through relevant and up-to-date education. Reform of the state has been addressed in a way that is worthy of the term reform, perhaps by Reform and Eesti 200. It has also been specifically mentioned, but more narrowly defined, in the Isamaa programme.

Municipalities would be more motivated to develop the business environment by the Reform, Isamaa, Eesti 200, Sotsi and Vabaerakond.

Most of the programmes are about infrastructure to improve external connections, but direct flights (which is the weakest in Estonia) are mentioned only by Eesti 200 and the Socialists. However, the infrastructure section of the Centre, EKRE, Isamaa and Greens tends to focus on popular internal connections, although railways etc. are also mentioned.

Facilitating the inclusion of foreign labour is mentioned very cautiously by Reform, Sotsii and Eesti200. The solution to labour shortages seems to be seen more in terms of raising activity rates, education and innovation. However, as Estonia’s own human resources are in any case small and largely inactive, one would also expect a constructive, needs-based approach to foreign labour and to openness to the outside world in general. Ultimately, openness and the capacity to learn in one way or another are in the formula for success.

Only a fifth of the proposals in the economic chapter of the EKRE programme are pro-economic development. The remainder are clearly aggravating, with no significant impact, already implemented by previous governments or potentially with both small positive and negative effects. On the positive side, there are some rather bold fiscal promises, for which no sources of financing are mentioned in the programme. If the source of coverage is external debt, there are few productivity-enhancing pledges to ensure that the debt will be repaid in the future. To the voter, a programme without a lot of promises tells them that if things get done, there will be no fiscal respite.

Isamaa’s programme is broader, more open and more constructive than that of EKRE. The wording has been slightly softened as regards the involvement of external experts, but the programme is generally sparse on the labour market. The element of state reform is stronger than in the Centre Party or the Social Democrats.

As a whole, the Employers “Manifesto has perhaps the most in common with the programmes of the Estonian 200 and the Reform Party. With the Social Democrats, the two would find common ground in the innovation chapters, but the parties” programmes on social services, public reform and public finance may lose their flavour completely in the cocktail of each other. Both Employers and political parties broadly agree that the key to economic development is innovation, which should start now, but innovation capacity is currently sorely lacking, so the parties need to have a plan for the intermediate, learning period.