During the last 30 years, Estonian companies have made direct investments abroad worth €11.4 billion, a study of foreign investments by Estonian companies completed at the Faculty of Economics of the University of Tartu shows.
The most investments have been made in Lithuania, Latvia, Cyprus, Finland and the UK, the Estonian Research Council said in a statement on 9 December.
The number of Estonian companies that have made direct investments abroad has grown rapidly over the years – from 152 in 1998 to 1,246 by the end of 2021, professor Urmas Varblane, the head of the working group that conducted the survey, said. Investing abroad can be seen as one of the tools to increase the international competitiveness of Estonian companies.
“Although the investments made in Estonia still exceed those made in other countries from Estonia, this ratio has become more equal over time,” Varblane said.
The sectors that have invested the most abroad over the past 30 years are the financial sector, trade, manufacturing, and real estate. The share of financial intermediation in all investments made from Estonia has decreased over time due to the reorganisation of the activities of the subsidiaries of foreign banks here. At the same time, international investments by companies of the manufacturing industry have grown rapidly.
An impact on Estonia
The companies that participated in the survey mostly had a positive opinion of the international investments made.
“Investments by businesses abroad also have an impact on Estonia as their country of origin: in the interviews, the creation of jobs, the development of employees’ skills and the transfer of knowledge to Estonia were the main things highlighted. Inspiring other companies to follow in the investors’ footsteps and invest abroad themselves in the future was also seen as an important benefit,” Varblane pointed out.
Companies operating in prominent foreign markets also have an important role to play in shaping the country’s image, as the image created also helps other companies of the country of origin to be more successful in foreign markets, he added.
According to Uku Varblane, a member of the working group, the motives of Estonian companies when investing abroad can be divided into two: proactive strategic action and reactive behavior, where an opportunity that has arisen is seized.
“New motivators include motivating employees with new opportunities, spreading the Estonian experience, better access to technology stimulus funds, although sometimes it’s also compulsion, such as investor demands,” he said.
