Coauthors: Rainer Kattel & Tarmo Kalvet

In many respects the macroeconomic policy environment of Estonia is similar to that of other EU member states: after the introduction of the euro in the near future, supervision over the monetary policy will be exercised by the European Central Bank; the Stability and Growth Pact of the European Union establishes clear restrictions in the fiscal policy (including tax policy). Similarly, the competence of the European Union includes the common agricultural policy and foreign trade policy, including the application of customs regime with regard to third countries, and so forth. For the European Union as a whole, such a situation leads to an enormous challenge to develop the economic environment in a manner that is simultaneously appropriate for member states in very different stages of development and for industries with highly different development trajectories and international networks.

Being now a member of the European Union, Estonia has found itself in a totally different economic policy environment where from the point of view of the desired economic convergence Estonia’s actual specialisation in the common market and the implementation of a development strategy supporting the same will acquire a much more important role than the earlier relatively technical transposition of the acquis communitaire.