20 years crossroad

20 years of entrepreneurial journey

toward crossroads

Mehis PärnCoordinator of Enterprising Awareness Program

Enterprise Estonia

Enterprise Estonia

Enterprise Estonia is one of the largest institutions within the national support system for entrepreneurship in Estonia, providing financing products, advice, partnership opportunities and training for entrepreneurs, research and development institutions and the public and third sectors

http://www.eas.ee

Historical background

• 1987 privat enterprises were allowed with limitations• Before that, private business went under the criminal law• Young entrepreneurial culture • Self learning and lack of role models

Great success

• 2007/2008 Human Development Index ranking: 44. position (Group of: High Human Development)• Heritage Foundation index of economic freedom: 12. position• The Fraser Institute Economic Freedom index: 14. position• World Bank, Ease of Doing Business rank: 17. position• The IMD World Competitiveness Yearbook: 22. position•The Global Competitiveness Report: 27. position

Great success

Real GDP growth rate  1998 1999 2000 2001 2002 2003 2004 2005 2006 AvarageLatvia 4,7 3,3 6,9 8 6,5 7,2 8,7 10,6 12,2 7,6Estonia 5,4 -0,1 9,6 7,7 8 7,2 8,3 10,2 11,2 7,5Ireland 8 10,4 9,4 6,1 6,6 4,5 4,4 6 5,7 6,8Poland 5 4,5 4,3 1,2 1,4 3,9 5,3 3,6 6,2 3,9Finland 5,2 3,9 5 2,6 1,6 1,8 3,7 2,8 4,9 3,5Czech Republic -0,8 1,3 3,6 2,5 1,9 3,6 4,5 6,4 6,4 3,3United States 4,2 4,4 3,7 0,8 1,6 2,5 3,6 3,1 2,9 3,0United Kingdom 3,4 3 3,8 2,4 2,1 2,8 3,3 1,8 2,9 2,8France 3,5 3,3 3,9 1,9 1 1,1 2,5 1,9 2,2 2,4Portugal 4,9 3,8 3,9 2 0,8 -0,8 1,5 0,9 1,3 2,0Germany 2 2 3,2 1,2 0 -0,2 1,1 0,8 2,9 1,4

Great success

GDP per capita in PPS (EU27=100%)  1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008EU (27 countries) 100 100 100 100 100 100 100 100 100 100 100 100Slovenia 76,9 77,7 79,6 78,8 78,9 81,2 82,3 85,3 86,8 87,8 90,6 90,7Czech Republic 73,1 70,6 69,7 68,6 70,4 70,6 73,6 75,3 76,6 78,6 81,5 81,9Estonia 41,9 42,4 42,4 44,7 46,2 50 54,5 56,9 62,9 68,4 71,7 71Slovakia 51,4 52,1 50,6 50,2 52,4 54,2 55,6 57,2 60,5 63,7 68,7 70,8Hungary 51,6 52,8 53,6 56,2 59 61,6 63,4 63,3 64,2 65 64,4 63,3Lithuania 38,2 40,2 38,8 39,4 41,6 44,1 49,1 50,5 53,2 56,2 60,1 61,7Latvia 34,7 35,7 36,1 36,8 38,8 41,3 43,4 45,8 49,9 53,7 58,2 58,5Croatia 46 47,3 44,4 45,5 46,3 48,4 50,6 52,1 49,9 51,5 57,5 57,8Poland 46,9 47,9 48,7 48,4 47,7 48,4 49 50,7 51,2 52,4 54,6 55,5Romania     26 25,9 27,6 29,4 31,4 34,1 35,4 38,9 40,4 41,5Bulgaria 26,5 27 27 27,9 29,3 31,1 32,6 33,8 35,3 36,7 38,1 39,1Macedonia 26,7 26,7 26,9 27 25,2 25,1 25,7 26,7 27,9 28,2 28,9 29,2

GDP and sectors 2006

Current situation

“Scissors”

Real gross wages growth

Problems!

• Too much success!• Lots of foreign money• Weak international competitiveness – small exporting sector• Low value added sectors are dominating• Labour costs are raising quickly• Inefficiency • A little willingness to learn or develop • No cooperation • Foreign expectations are changing

Possible scenarios

Natural selection

Nordic Star

Backwater Idling

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Passive state Active state

Surroundings Surroundings

Challenges

• Businesses and households: need of changing attitudes - continuous learning, creativity, enterprising and innovative attitude

• Entrepreneurs should become more efficient, productive and competitive

• Public sector putting strategies into practice

• Educational system need to be reformed• Cooperation on every level

Conclusion

• Hopefully economical decline awakes!

• New generation could bring new attitude

• Important support from EU

• Estonians are used to continuous changes and reforms

• If only somebody gives us wisdom to make right choices at crossroads

Thank you, for your attention!

Mehis PärnCoordinator of Enterprising Awareness Program

Enterprise Estoniamehis.parn@eas.ee

+372 738 6011