In the Estonian industry, mainly electronics, wood products, food, electrical equipment, machinery and metal products are produced. Manufacturing is mainly carried out in small and medium-sized companies, often with the help of Swedish, Finnish and other foreign investments. Around a quarter of Estonians are employed in industry.
The industrial sector is knowledge intensive and technologically advanced. More than two thirds of production is exported, mainly within the EU. The contrast is strong against the Soviet era’s large-scale and heavy chemical and metal industry, whose goods were exported exclusively within the Soviet Union.
Estonia has developed international technology companies such as Skype, Nortal and Transferwise. Three young Estonian programmers were behind the digital technology of the Skype free phone, which is currently owned by Microsoft. Skype still has most of its development team at Tallinn Technical University.
The country’s well-trained workforce has been used by electronics and IT companies in the west. Telecom chains like Ericsson have manufacturing in Estonia, where the development of mobile telephony has been rapid. The country also has success in, for example, genetic engineering.
The construction industry contributed to the high growth rate in the early 2000s, but it stopped during the financial crisis of 2008-2010. All industrial production fell dramatically in 2009 (see Financial overview), but has since experienced a strong upturn. Following a new construction boom in 2012, the construction industry has been at a more modest level.
Estonia’s industry was founded during the Russian tsar period in the 19th century with textile manufacturing, mechanical workshops, paper and pulp mills and cement manufacturing. Some were razed during World War II, but during the Soviet era (1944-1991), an environmentally destructive and often militarily oriented industry developed from Moscow.
- COUNTRYAAH: List of top trading partners of Estonia. Includes countries that imported most shipments from and exported most goods to the country.
The transformation of the Estonian industry from labor-intensive low-wage production can be symbolized by the textile manufacturer Krenholm in Narva. The factory started in the Russian Empire in the 1850s and, just over a century later, became one of the Soviet Union’s largest industries with close to 12,000 employees. Krenholm was privatized in 1994 when it was sold to Swedish Borås Wäfveri, which moved production from Sweden to low-wage country Estonia. But costs increased, and despite rationalizations, Krenholm competed out of Asian production with even lower wages. In 2010, Krenholm went bankrupt and has been followed by small-scale manufacturing.
Two men are convicted of spying on Russia
Two Estonians are sentenced to four and three years in prison for working for Russian intelligence agencies. In recent times, the number of cases of espionage linked to Russia has increased in the Baltic countries.
Russian diplomat is expelled
Estonia expels a Russian diplomat as a result of a nerve poisoning attack on a Russian former spy and his daughter in the UK in early March. It is taking place in concerted action with some 20 countries, mainly in the EU, in solidarity with the British government accusing Russia of being behind the attack. In total, over 100 Russian diplomats are expelled, 60 of whom are from the United States. Moscow denies all involvement in the poison attack and threatens with countermeasures.