Estonia, being from January 2011 one of only two countries in the single currency area that actually meet its debt and deficit rules, was chosen for 2010 “Country of the Year” award by the Economist magazine’s blog Eastern Approaches. Estonian Finance Minister Jürgen Ligi has a Finance Minister of the Year award from the Emerging Markets for steering Estonia’s economy from severe recession to recovery and – against all odds – euro accession. And so on.

It can be said, that year 2010 has been inspiring to Estonia. But, while Estonia is enjoying European Supermodel status, the images of perfection should not confuse projected images of perfection with rather more mundane reality warns the World Bank. “Everyone knows the patterns of growth that we saw in 2004-2008, the future will be different: technology led, innovation led, export led. It will be about productivity, not about how fast can we expand domestic demand using foreign capital”, describes Peter Harrold, World Banks´s director of Central Europe. And eventually, “Export or die” was recommended by macroeconomist Edward Hugh to be a good slogan for the Estonian economy now, indicating that without a strong, sustainable export sector the economy simply will not grow vigorously.

Regardless of the success in managing the economic crises, Estonia still has to cope with ongoing structural problems of the economy and immediately address the challenges of decreasing competitiveness and productivity that have been emerging already a while. Therefore Estonia has to focus on technology and innovation led sectors with growing export demand and potential for increasing productivity. This requires complex actions addressing manufacturing industry and service sectors simultaneously.

When taking a closer look at the latter – service export and cross-border trade – there are some important tendencies that indicate to existing export potential and call for attention and action of entrepreneurs of Estonia in order to EXPORT, NOT DIE:
• When Estonian overall balance of foreign trade has been predominantly negative over the last decades then the balance of payments of services in contrary has been predominantly positive.
• When several sectors in manufacturing industry fell substantially during 2009, then service export was relatively stable, with some sectors (like ICT) even showing growth tendencies.

These tendencies show the competitiveness and export potential of Estonian service sector. Additionally, the global structure and tendencies of cross-border trade in services give valuable information on sectors with potential of growing demand and productivity. In developed countries the overall trend is the growth of high productivity services on behalf of industries with low value added.

Among different service categories, OECD´s data shows, that while transit- and travel services constitute about half of total service export, the highest growth-rates lie in different business (increase from 25 to 27% of total EU27 service export in 2004-2008) and financial services (increase from 7 to 9-10%) on behalf of transit- and travel services. These service categories involve legal, accounting, management consulting, advertising, market research, research and development and other technical, business and financial services. Furthermore, according to OECD, the gross value added generated by these services has grown from 10-20% to 20-30% of the global gross value added during last decades.

EU27 service export volume by service category 2004-2008 (mln USD), Source: OECD

The knowledge about these trends indicates that also Estonian service providers entail good opportunities for expanding their export in these service categories. The main obstacles in effective exploitation of export potential of Estonian services (and goods) have been the obscurity of Estonian services amongst international clients, investors etc due to previous Soviet identity, smallness, logistical location etc of the country and the lack of courage and skills of Estonian entrepreneurs to sell their services in world market.

The success of Estonian ICT services in foreign markets show that Estonian services are competitive, becoming more and more known of their innovativeness and high-quality, resulting in increasing publicity and acknowledgement. So let´s forget our smallness and be courageous in marketing of our services and products in order to sell, export and live.